Japan likely stepped in during the Golden Week holidays and could re-enter the market if the Yen weakens again past the closely watched 160 per Dollar threshold, according to former central bank official Atsushi Takeuchi, who spoke to Reuters news agency.
He said that while the Ministry of Finance (MOF) is not committed to defending any specific exchange rate level, it likely acted to prevent a rapid Yen decline that could have accelerated once the currency dropped below 160.
“The 160 line has become a psychologically important level traders are focusing on. The MOF had to meet words with action and intervene to avoid giving the impression Tokyo would tolerate yen ?slides,” Takeuchi commented.
Authorities may also have been uneasy about the simultaneous selling of Japanese government bonds (JGBs) alongside the Yen, which could signal the early stages of a broader “Japan selling” trend, he said.
“In the past, the Yen was bought as a safe-haven currency in times of crises. That’s no longer the case. If I were a bond trader, I also wouldn’t buy JGBs given Japan’s loose fiscal policy,” Takeiuchi added.
Sources told Reuters that authorities stepped in last Thursday, with money market data indicating around $35 billion was deployed to support the Yen.
Since then, the currency has experienced three sharp intraday surges during the Golden Week holiday period through until Wednesday, at one point climbing to 155.00. The Yen was trading near 156.30 per Dollar on Thursday.
“The price action certainly looks like intervention. Japanese authorities understand that they have no power to change the weak-Yen tide around. Their goal is to stop Yen falls in hope external factors would turn in their favour,” he stated.
The MOF, which is responsible for Japan’s currency policy, has not confirmed whether it has carried out any market intervention.
Takeuchi, who was involved in several Yen-selling operations between 2010 and 2012, is currently serving as president of the Ricoh Institute of Sustainability and Business.
Moreover, Japan’s top currency diplomat Atsushi Mimura has also raised the idea of potentially intervening in crude oil futures markets, suggesting that speculative moves there could be contributing to volatility in the Yen.
However, Takeuchi rejected the notion as highly improbable, arguing that any attempt by Japan to intervene in oil futures would be extremely difficult to implement, largely outside Tokyo’s practical control, and operationally complex.
“Given the operational risks, I don’t think Japan will intervene in the oil futures market. But if you’re the top currency diplomat, you need to show you have many options on the table.”
Japan has traditionally prioritised preventing sharp appreciation of the Yen, as a stronger currency can weigh on its export-driven economy. Yet since 2022, its focus has increasingly shifted toward limiting excessive Yen weakness, which can drive up inflation and reduce household purchasing power.