Japan Intervenes to Prop Up Yen Ahead of BOJ Policy Decision

Japan has intervened in the foreign exchange market to prop up its yen currency, conducting a yen-buying, dollar-selling operation in New York on Thursday. This move comes ahead of the Bank of Japan's policy decision on Friday, where the central bank is expected to keep interest rates steady at 1%. The intervention aims to prevent further weakening of the yen, which has hit four-decade lows due to the Iran war-driven energy shock.

The operation was confirmed by a market source and corroborated by US Treasury Secretary Scott Bessent, who stated that Japan may have intervened to prop up its currency. This move is seen as a response to the rising living costs caused by the yen's weakness, which has exacerbated the impact of energy import price hikes.

The Bank of Japan's policy decision on Friday will be closely watched for signals on future rate hikes. BOJ Governor Kazuo Ueda faces pressure from Washington to push through further rate increases, while Prime Minister Sanae Takaichi's administration is wary of additional rate hikes due to their potential impact on the economy.