Yen vs Dollar: Japan Conducts First Market Intervention Since July 2024

Yen vs dollar surged sharply after Japan conducted its first market intervention in 21 months. The Silicon Review reports on the MOF's decisive action as the currency hit 160.72 before spiking to 155.

Japan's Ministry of Finance intervened in the currency market on Thursday to prop up the yen, marking the first such action since July 2024. The yen vs dollar exchange rate plunged from the upper 160 range to as low as 155.57 per dollar following the intervention.

Finance Minister Satsuki Katayama had warned earlier Thursday that "the time for decisive action, which I have previously mentioned, is finally getting closer."  Her top currency diplomat, Atsushi Mimura, went further, issuing a "final advisory if you want to escape" to currency speculators.

The intervention was triggered by the yen's slide to 160.72 against the dollar in Tokyo trading, its weakest level since July 2024. The currency's decline has been accelerated by the Iran war, which sent Brent crude above $126 per barrel a severe blow to Japan, the world's second-largest oil importer.

Currency intervention feels a bit like fighting the wind, analysts warn, but authorities can move the currency sharply if they wish. The US was notified ahead of Japan's action, consistent with a Group-of-Seven agreement to alert counterparts.

On Friday, Mimura refused to confirm whether any action had been taken, saying only "I have no intention to comment on such matters."  The yen trimmed some gains to trade around 157 per dollar, but remained on track for its biggest weekly rally in more than two months.

Ken Crompton, head of rates strategy at National Australia Bank, noted the difficulty of sustained intervention: "The weak yen is probably there for a reason and how successful the MOF will be in fighting against the tide on a sustained basis is sort of hard to see at the moment." 

As Japan conducts its first currency intervention in 21 months with the yen vs dollar spiking past 160, The Silicon Review examines whether Tokyo's 'final warning' can hold the line or if the underlying economic pressures will ultimately overwhelm the MOF's firepower.