(Bloomberg) — The yen headed for its biggest daily gain in more than two weeks after Finance Minister Satsuki Katayama’s latest comments on the currency kept traders on alert for the risk of intervention.
The Japanese currency strengthened as much as 0.6% to 157.95 per dollar on Friday, outperforming all of its Group-of-10 peers. Katayama said US President Donald Trump shared concerns over the yen during a meeting with Prime Minister Sanae Takaichi earlier this week in New York, offering some relief after renewed dollar strength pushed it toward the key 160-per-dollar level.
The finance minister also said she would continue to coordinate with her US counterpart Scott Bessent. The comments are likely to make traders more cautious about betting against the yen, reinforcing the threat that authorities could step into the market again should its weakness persist.
“Intervention risk should put a ceiling on further JPY weakness,” said Moh Siong Sim, a strategist at Oversea-Chinese Banking Corp. “More importantly, the JPY may be nearing a turning point as Trump’s concerns over its weakness point to deeper US-Japan coordination to support the currency.”
The yen has come under renewed pressure as expectations for further Federal Reserve rate increases threaten to keep the US-Japan interest-rate gap wide. Uncertainty over how quickly the Bank of Japan can continue tightening has also weighed on the currency.
While officials have emphasized the speed and disorderliness of currency moves rather than any specific exchange-rate level, market participants have viewed the area around 160 as one where intervention risk rises.
Japan and the US carried out their first coordinated yen-buying intervention since 1998 this summer after the currency weakened beyond 160. Japan spent a record ¥15.4 trillion ($97.4 billion) intervening in the month through Aug. 26, according to Finance Ministry data.
Bessent has also continued to signal support for a stronger yen, potentially giving Japanese warnings greater weight with traders than in previous episodes of currency weakness.
–With assistance from David Finnerty.
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