Japan Intervenes in Foreign Exchange Markets to Support Yen Ahead of BOJ Decision

Japan intervened in foreign exchange markets to prop up its yen currency ahead of a Bank of Japan policy decision on Friday, according to market sources.

The intervention comes as the yen has slumped to four-decade lows due to the Iran war-driven energy shock and rising living costs. Tokyo spent a record 11.7 trillion yen ($73 billion) intervening in foreign exchange markets between late April and early May, but the brief boost to the yen was quickly wiped out.

Finance Minister Satsuki Katayama declined to comment on whether Japan intervened this time, saying only that 'we are always ready to respond with a sense of urgency' to exchange-rate moves. However, she hinted at U.S. involvement in the effort to stem the yen's decline, including so-called rate checks by the Federal Reserve.

The move comes ahead of Friday's Bank of Japan policy decision, where Governor Kazuo Ueda is expected to keep interest rates steady at 1% but signal his readiness to continue pushing up borrowing costs. The BOJ has been under pressure from Washington to push through further rate hikes to combat yen weakness and address inflation.