Yen Gains Fade Hours After Japan's Dollar-Selling Intervention, Dollar Climbs Back Toward 160

The dollar sank 2.4% against the yen on Thursday, its worst single-day drop since January 2023, after Japan's Ministry of Finance directed yen-buying, dollar-selling intervention in the New York session, a market source told Reuters. But the bounce didn't last: the dollar clawed back as much as 0.45% against the yen in early Friday trading in Asia, hitting 160.175, according to Reuters.

The pattern is familiar. It was Tokyo's first such move in three months, aimed at arresting a four-decade slide in the yen that has been hammering Japanese households already squeezed by an Iran war-driven energy price shock.

The dollar hit 159.22 yen on Thursday in what analysts called clear signs of official intervention, then drifted back to 159.63 by Friday morning in Asia, according to CNA. By the time Asian trading picked up, it had climbed further to around 160.07, per Reuters reporting from Tokyo, before pushing past 160.17 in the broader Asia session.

Officials won't confirm it, but nobody's really denying it either

Japan's Finance Minister Satsuki Katayama declined to confirm the intervention when reporters asked her directly on Friday morning. "We are always ready to respond with a sense of urgency," she said, according to Reuters. Japan's top currency official, Atsushi Mimura, gave the same non-answer: "We are in close contact with relevant authorities about the foreign exchange market," he told reporters, adding Japan was "always ready to take appropriate actions."

Tokyo never officially confirms same-day intervention, but the market read was unambiguous. The Nikkei newspaper reported Friday that Japan likely conducted "massive" yen-buying intervention, and that U.S. authorities ran so-called rate checks, a known precursor to coordinated currency action, according to CNA's reporting on the Nikkei story.

U.S. Treasury Secretary Scott Bessent added fuel to that read. Bessent said Thursday that Japan may have intervened, and that the yen "seems very undervalued to me," according to a Fox Business Network reporter cited by CNA.

The move came ahead of the Bank of Japan's policy decision, where the central bank is widely expected to keep interest rates steady at 1% but signal its readiness to continue pushing up borrowing costs. Markets are shifting focus to how hawkish BOJ Governor Kazuo Ueda could be on the future rate-hike path in his post-meeting news briefing, expected to be held Friday afternoon.