Tokyo Steps In: Japan Intervenes in Foreign Exchange Markets Ahead of BOJ Decision

Japan intervened in foreign exchange markets for the first time in three months on Thursday to prop up its yen currency, which has been sliding towards four-decade lows. The move came ahead of the Bank of Japan's policy decision on Friday, where interest rates are expected to remain steady at 1%. US Treasury Secretary Scott Bessent said the yen 'seems very undervalued to me', suggesting Washington may support Tokyo's efforts to combat a weak yen.

The intervention was a response to the yen's sharp decline against the dollar, which hit a more than two-month low on Thursday. After hitting 159.22 per dollar, the yen resumed its decline in Asia and stood at 160.07 on Friday.

Finance Minister Satsuki Katayama declined to comment on whether Tokyo intervened, saying only that Japan was 'always ready to respond with a sense of urgency' to exchange-rate moves. The Bank of Japan is expected to signal its readiness to continue pushing up borrowing costs in its policy decision.