Japan Intervenes to Prop Up Yen Ahead of BOJ Policy Decision

Japan intervened in foreign exchange markets for the first time in three months to prop up its currency, the yen, ahead of the Bank of Japan's (BOJ) policy decision on Friday. According to a market source, Tokyo conducted yen-buying, dollar-selling intervention in New York on Thursday.

The move comes as the yen has slumped to four-decade lows, threatening to worsen living costs hit by the energy shock driven by the Iran war. The currency's weakness has also been a concern for Japanese policymakers, who have warned of action to combat its decline.

Japan's top currency diplomat, Atsushi Mimura, hinted at US involvement in the effort to stem the yen's decline, including so-called rate checks by the Federal Reserve. Mimura declined to comment on intervention but stated that Japan is receiving support from the United States 'that goes beyond psychological support,' and he is in constant contact with relevant authorities.

Markets are shifting focus to how hawkish BOJ Governor Kazuo Ueda could be on the future rate-hike path in his post-meeting news briefing expected to be held on Friday. The US Treasury Department has signalled the need for the BOJ to push through further rate hikes, warning that excess volatility in the currency is undesirable.