Prime Minister Sanae Takaichi told parliament Friday that Japan’s strategy for defending the yen’s credibility rests on strengthening the domestic economy rather than relying on foreign-exchange intervention, even as the currency hovers near a key threshold that has historically triggered government action.
“The economic and fiscal management I am pursuing is not intended to steer foreign-exchange rates,” Takaichi said during a parliamentary session. She said her policies seek to “increase domestic investment, reinforce Japan’s supply chains and boost growth potential.”
“I believe that enhancing the international competitiveness of the Japanese economy through these initiatives will help maintain confidence in the yen,” Takaichi added.
The yen traded at 159.97 to the dollar on Friday, near the 160 threshold that analysts and the market treat as a potential trigger for renewed government intervention. The weakening persists despite Japan spending more than $73 billion to support the yen between April 28 and May 27, the country’s first intervention since 2024. Officials grew increasingly concerned about the weaker currency driving up the cost of imports such as food and energy.
Finance Minister Satsuki Katayama on Friday reiterated that the government “stands ready to take appropriate action in the forex market as needed,” emphasizing that she is in “close communication with U.S. authorities.”
The intervention spending and Takaichi’s comments have fed market expectations of an interest rate increase by the Bank of Japan, which initially provided some support for the yen, according to analysts.
Patrick Munnelly, market analyst at Tickmill Group, said in a note that “while BOJ tightening risk is rising, rate differentials and dollar resilience remain powerful offsets.” He added that “intervention risk has not disappeared.”
The weakening yen persists amid continued Middle East tensions, which have contributed to global market uncertainty and supported the dollar.