Japan intervenes to stem yen’s slide against dollar

Japanese authorities intervened in the foreign exchange market to support the yen after the currency fell to its weakest level in nearly four decades, according to Kyodo News on Friday.

Authorities bought yen and sold US dollars on Thursday, Kyodo News reported, citing a government source.

The Japanese currency strengthened from 163.86 against the dollar on Tuesday to around 158.70 on Friday, gaining more than 5 yen in three days.

The yen surged by nearly 5 yen within about 50 minutes during New York trading on Thursday, fueling speculation among market participants that Tokyo had conducted a large-scale intervention.

Japanese Finance Minister Satsuki Katayama declined to confirm whether authorities had entered the market but said the government was maintaining a high level of vigilance.

Japan's top currency diplomat, Atsushi Mimura, also declined to comment directly on the reported intervention, while indicating that Tokyo was receiving support from the US beyond verbal backing.

US Treasury Secretary Scott Bessent said Thursday that the yen appeared "very undervalued" and that excessive volatility in the currency was unhealthy.

The New York Federal Reserve, acting on behalf of the US Treasury, also conducted a dollar-yen rate check, which is widely regarded as a possible precursor to direct market intervention, according to the Financial Times.

Speculation about intervention had intensified after the yen weakened to 163.99 per dollar on July 23, its lowest level in nearly 40 years.

The currency had come under pressure from safe-haven demand for the dollar amid the Middle East conflict and concerns that Japanese Prime Minister Sanae Takaichi's expansionary fiscal policies could worsen the country's public finances.

A weaker yen supports Japanese exporters by increasing the value of overseas earnings, but it also raises import costs for energy, food and raw materials, adding to pressure on households and businesses.