Japan Intervenes in Yen Markets Ahead of BOJ Decision

The Bank of Japan is facing increasing pressure to intervene in currency markets as the yen has fallen to four-decade lows. In response, Japan conducted a yen-buying intervention on Thursday in New York, its first such move in three months.

According to market sources, the intervention was done in conjunction with dollar-selling operations. This move is seen as an effort to prop up the yen and mitigate the effects of rising living costs due to the Iran war-driven energy shock.

The Bank of Japan's policy decision on Friday is also expected to play a significant role in shaping market expectations. While interest rates are widely anticipated to remain steady at 1%, the central bank may signal its willingness to continue pushing up borrowing costs.

U.S. Treasury Secretary Scott Bessent commented on the situation, stating that Japan's actions seem 'very undervalued' to him. This statement suggests that some see the yen as being significantly overvalued and in need of support.