Japan Mulls FX Intervention to Bolster Yen After 7% Drop
Japan’s yen has weakened by 7% against the dollar over three months, sliding to 154.79 per dollar on November 12—a nine-month low. Prime Minister Sanae Takaichi’s growth-first stance has delayed interest-rate hikes, leaving the currency exposed. Finance Minister Satsuki Katayama warned of rapid, one-sided moves and signaled a high sense of urgency. With the Bank of Japan holding rates steady, Tokyo is considering direct yen intervention by buying yen and selling dollars, funded by its $1.15 trillion foreign reserves. Previous yen intervention in July 2024 cost nearly $100 billion when the currency hit 160. While a weak yen aids exporters and tourists, it raises import costs and fuels domestic inflation, squeezing households and small businesses. Continued yen weakness has political fallout, drawing criticism from US President Donald Trump over unfair trade advantages. Any decision on yen intervention will be made by the Finance Ministry and executed through commercial banks, with monthly spending disclosures. Market participants are watching closely for official action amid rising FX volatility and potential shifts in global risk sentiment. Keywords: yen intervention, FX intervention, Japanese yen.
Neutral
The report centers on potential yen intervention, a macro-economic FX event with no direct link to cryptocurrencies. While large-scale currency moves can influence global risk sentiment, past interventions in the yen have had limited impact on crypto markets. Traders may see short-term volatility as FX flows adjust, but the long-term effect on digital assets is expected to be muted. Overall, this development is neutral for crypto, as it neither directly boosts demand for digital currencies nor undermines their fundamentals.