Japan Signals It Stands Ready to Act as Yen Slides Toward 160

A fast slide and a pointed reminder

Japan's top currency official, Atsushi Mimura, told reporters Thursday he's concerned by how quickly the yen has been moving, saying "I have a strong impression that the currency moves over the past few days have been too fast." He added, "It's too early to forget what happened this summer," while steering clear of any comment on specific exchange-rate levels. The yen is nearing 160 per dollar, a threshold that was breached before Japan undertook a record monthly effort to backstop the currency over the summer, partly alongside the US.

What pushed the yen lower

Over the past two sessions, the yen weakened from about 158 to almost 160 against the dollar. That came after US price data topped forecasts and Fed officials sounded more hawkish, stoking expectations the Fed will resume rate increases next month. Some traders even assigned a modest probability to a half-point Fed hike in December, and the fact that the US notched a third consecutive month in which consumer inflation exceeded expectations strengthened the case for additional tightening. The yen is currently trading near 159.50 against the greenback.

Tokyo's summer playbook

Japan disclosed last week it used ¥15.4 trillion ($96.5 billion) on yen-buying operations over three consecutive business days beginning July 30. The three-day push strengthened the yen from beyond 163 per dollar to as firm as 155.23. After the joint action, US Treasury Secretary Scott Bessent and Finance Minister Satsuki Katayama said authorities were ready to step in again to address volatility in foreign exchange.

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Why it matters for your portfolio

In Japan, markets have largely priced in a rate increase at the Bank of Japan's Dec. 18-19 meeting. What happens after remains less certain, with the policy rate expected to move closer to a neutral setting. In plain English: if rate paths diverge further and authorities stay poised to intervene, currency swings can ripple into returns on yen assets and the relative pull of dollar exposure.

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