Japan may deploy additional yen-buying intervention and accelerate interest-rate hikes by the Bank of Japan if the currency remains under pressure, a former senior foreign-exchange diplomat said on Friday.
The warning underscores growing concern in Tokyo over the yen’s recent decline, which has driven the currency to multi-decade lows against the dollar. The diplomat, speaking on condition of anonymity, said authorities are prepared to take further steps to stabilize the exchange rate and prevent speculative attacks.
The Bank of Japan has already ended negative interest rates and is gradually normalizing monetary policy. However, the diplomat suggested that further rate increases could be implemented more swiftly than previously anticipated if the yen’s weakness persists or accelerates.
Japan last intervened in the foreign-exchange market in October 2022 to support the yen, spending an estimated $60 billion in the process. The move followed a sharp depreciation driven by widening policy divergence between Tokyo and other major central banks.
The yen has weakened further in 2024, trading near 155 per dollar, a level that has prompted repeated warnings from Japanese officials about the risks of disorderly moves. Finance Minister Shunichi Suzuki has reiterated that all options remain on the table to curb excessive volatility.
Analysts note that while intervention can provide temporary relief, sustained yen strength typically requires a combination of tighter monetary policy and structural reforms to boost domestic demand and attract capital inflows.
The diplomat’s remarks add to signals that Japanese policymakers are increasingly prepared to act decisively to address currency weakness.
