TOKYO: Currency traders are on high alert for intervention after further weakness in the yen and a call between Japanese finance minister Satsuki Katayama and US treasury secretary Scott Bessent.
The yen is trading at around 161.57 against the dollar, near its weakest level in four decades. Katayama told reporters Tuesday that she and Bessent agreed to take “bold steps” on currencies if needed and said the nations are increasingly “aligned” on foreign exchange policy.
The currency has slumped on concerns that the Bank of Japan may not be raising borrowing costs fast enough to control inflation despite a rate hike at its policy meeting last week. The elevated price of oil due to the US-Iran war is also weighing on the yen.
“Japanese authorities may have wanted to send a message through the US-Japan talks that they are acting in coordination with the US and that the hurdle for intervention is not high,” said Takeru Yamamoto, a trader at Sumitomo Mitsui Trust Bank in New York.
“While intervention concerns have intensified, the underlying yen weakness hasn’t changed, and dollar-yen could test the 162 level this week.”
