Japan Intervenes in Foreign Exchange Markets to Support Weakening Yen

Japan intervened in foreign exchange markets for the first time in three months to prop up its weakening yen, a market source said on Thursday. The move came ahead of the Bank of Japan's policy decision on Friday, where the central bank is expected to keep interest rates steady at 1% but signal its readiness to continue pushing up borrowing costs.

The intervention was likely done to counter the yen's recent slump to four-decade lows, which has exacerbated the cost-of-living impact of rocketing energy import prices. The dollar sank to a more than two-month low against the Japanese yen on Thursday in what analysts said looked like official intervention.

U.S. Treasury Secretary Scott Bessent said Japan may have intervened to prop up its yen currency, stating that the yen 'seems very undervalued to me.' The Nikkei newspaper reported earlier on Friday that Japan likely conducted massive yen-buying intervention.