Yen Climbs Nearly 3-Week High as Japan Signals Concern Over Weak Currency

TOKYO: The yen rose sharply against the dollar, heading for its strongest close in nearly three weeks, following discussions among Japanese officials regarding the challenges posed by a weak currency during meetings with U.S. counterparts.

The currency gained up to 1.2% last Friday—the largest increase since September 7—reaching 156.94 per dollar, outperforming all other major currencies in the Group of Ten.

Prime Minister Sanae Takaichi expressed concerns about an undervalued yen in her conversation with U.S. President Donald Trump, reinforcing market caution over the potential for government intervention to support the currency.

U.S. Treasury Secretary Scott Bessent also touched upon the matter, noting that he discussed “the desirability of a strong yen” with Japanese Finance Minister Satsuki Katayama.

“Intervention risk alone should cap further weakness in the yen,” said Moh Siong Sim, a strategist at Oversea-Chinese Banking Corp.

“More significantly, we may be approaching a turning point. Trump’s stated concerns about yen weakness suggest deeper coordination between Japan and the U.S. to stabilize the currency.”

In recent weeks, the yen has faced renewed downward pressure amid expectations of additional Federal Reserve rate hikes, which could widen the interest-rate differential between the U.S. and Japan.

Market uncertainty surrounding the pace of monetary tightening by the Bank of Japan (BoJ) has also weighed heavily on the currency, pushing it closer to the sensitive 160-per-dollar threshold this week.

While Japanese authorities have consistently focused on the volatility and disorderliness of exchange rate movements rather than targeting specific levels, investors appear increasingly cautious around the 160-yen mark, viewing it as a potential trigger for intervention.

Recent options market activity reflects growing bullish sentiment toward the yen, indicating rising demand for protective hedges against the possibility of official action.

Data from the Commodity Futures Trading Commission showed that leveraged funds reduced their net long positions on the yen during the week ending September 22—a reversal from the prior week when they had turned positive on the currency for the first time since mid-2025.

This summer marked a significant moment for currency markets when Japan and the United States coordinated direct intervention to purchasing yen—the first such joint effort since 1998—after the currency slipped past the 160-per-dollar level.

According to Ministry of Finance data, Japan spent a record 15.4 trillion yen (approximately $97.4 billion) on currency market operations through August 26.

“The latest remarks from Japanese officials fail to tackle the core challenges: The BoJ continues to lag behind global peers, and there remains robust appetite for yen-denominated carry trades.” — Bloomberg

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