Japan Steps In to Support Yen Ahead of BOJ Policy Decision

Japan's finance ministry intervened in foreign exchange markets on Thursday to prop up the yen, which has been trading at four-decade lows. The intervention came ahead of the Bank of Japan's policy decision on Friday, where the central bank is expected to keep interest rates steady at 1 per cent but signal its readiness to continue pushing up borrowing costs.

According to a market source, Japan conducted yen-buying and dollar-selling intervention in New York on Thursday. The move was seen as a response to the yen's weakness, which has exacerbated the cost-of-living impact of rocketing energy import prices.

U.S. Treasury Secretary Scott Bessent said that Japan may have intervened to prop up its yen currency, and added that the yen 'seems very undervalued to me.'

The intervention was not a surprise, as markets had been on alert for yen-buying by Japanese authorities, who have warned of action for months. The brief boost to the yen was quickly wiped out in previous interventions, but analysts say the timing of this move was faster than expected.