Japan Intervenes in Forex Markets Ahead of BOJ Policy Decision

Japan stepped in to prop up its struggling yen currency on Thursday, conducting a dollar-selling intervention in New York for the first time in three months. The move came ahead of the Bank of Japan's policy decision on Friday, where interest rates are expected to remain steady at 1% but a signal is anticipated regarding potential future rate hikes.

The sudden yen-buying intervention was prompted by concerns over the currency's weakness, which has exacerbated the cost-of-living impact of rising energy import prices. U.S. Treasury Secretary Scott Bessent suggested that Japan may have intervened to support its currency, stating that it 'seems very undervalued'.

The dollar sank to a two-month low against the yen on Thursday, hitting 159.22 per dollar before recovering slightly in Asia. Analysts attributed the price movement to official intervention, with Toru Suehiro, chief economist at Daiwa Securities, noting that the timing was faster than expected.