Yen Surges Past 156 as Japan Prepares for Potential Intervention

The Japanese government and Bank of Japan (BOJ) conducted a rate check to assess exchange-rate levels as the yen surged past 156 against the dollar, signaling potential intervention to curb weakness.

Momentum in the foreign exchange market accelerated on September 18-19, with the yen briefly touching the upper 156 range. Despite the BOJ's decision to raise its policy interest rate from around 1.0% to around 1.25%, market expectations grew that additional rate increases would slow, and yen-selling, dollar-buying gained ground.

Awareness of diverging opinions among policy board members drove yen selling, prompting the Japanese government and BOJ to heighten their vigilance against rapid exchange-rate fluctuations. The rate check is considered a preparatory step for intervention, with market participants closely watching whether it will lead to actual yen-buying intervention.