USD/JPY Plummets as US and Japanese Officials Sound Alarm on Yen Weakness

USD/JPY plummeted to 157.00 from 157.75 after officials from both the US and Japan expressed concerns about the yen's weakness.

Katayama, a Japanese official, revealed that Trump had discussed the weak yen with Takaichi during their UN meeting this week, with Takaichi stating 'as a general principle' that an undervalued yen is a problem. This comment led to a 30-pip drop in USD/JPY.

Later, Katayama and Bessent reaffirmed the point that the undervaluation of the yen is a problem and expressed their expectation that the 'excessive' yen selling will be corrected. They also suggested that the market had 'misunderstood' something.

The language used by officials is not new, but what's notable is the escalation in who is saying it. The concern now reaches from finance ministers to leaders, and Tokyo has made a private summit exchange public, indicating coordination between governments.

With USD/JPY having taken back some of its losses since the joint intervention in July, officials are trying to prevent further decline before it becomes a retest of the highs. The US has shown willingness to intervene, but it remains unclear whether this will be enough to make a dent.