Japan Intervenes in Foreign Exchange Markets to Support Yen

Japan's finance ministry intervened in foreign exchange markets on Thursday to prop up the yen, which has been weakening due to rising energy costs and interest rate differentials with the US. This is the first intervention in three months, and it came ahead of the Bank of Japan's policy decision on Friday.

The move was likely a response to warnings from Finance Minister Satsuki Katayama that decisive action would be taken to stabilize the yen, which has fallen to four-decade lows. The US Treasury Department has also called for further rate hikes by the BOJ to combat excess volatility in the currency and address inflation concerns.

Analysts say that Governor Kazuo Ueda faces pressure from both sides - his dovish administration and the need to avoid causing further yen falls that could push up import costs and broader inflation. Meanwhile, US Treasury Secretary Scott Bessent said Japan may have intervened to prop up its yen currency, calling it 'very undervalued'.