Japan signals resolve on weak yen

On October 1, Prime Minister Sanae Takaichi stated that her government’s economic policies are aimed at lifting market confidence in the yen. She emphasized that these policies are not designed to manipulate exchange rates, framing the approach as domestically focused rather than targeting a specific currency level.

Takaichi also said she had previously told U.S. President Donald Trump that the yen’s undervaluation was a problem during a conversation the two held last month. Her comments highlight continued political attention in Japan to the currency’s weakness against the dollar.

On October 1, the dollar–yen pair was quoted in a range around 157.9–158.4. One cited level was 157.91, while an earlier New York session print was near 158.37, indicating that the currency remained relatively weak but off its most recent highs.

These trading levels came as investors assessed both recent official actions and the possibility of further steps to support the yen. The price action reflected sensitivity to policy signals from Tokyo and to expectations about global interest rate dynamics.

Current market pricing indicates that investors see a non-trivial chance of further official intervention in dollar–yen. Foreign exchange strategists have described a strong perception that additional USD/JPY (USDJPY) intervention is likely in the near future if volatility or weakness become pronounced.

Analysts have also cautioned that while intervention can influence short-term moves or curb disorderly trading, it may not be sufficient by itself to deliver a lasting recovery in the yen. They point to the importance of broader domestic policy settings in determining the currency’s trajectory over time.

Earlier in the year, a joint U.S.-Japan operation to support the yen was conducted alongside monetary policy tightening by the Bank of Japan. The central bank raised its policy rate by 25 basis points in September, marking a further step away from its earlier ultra-loose stance.

Data cited from Deutsche Bank (DBKd) show that these measures helped the yen become the top-performing currency among the G10 in the third quarter. Over that period, the yen gained about 3.3% against the U.S. dollar, even though it remained weak in absolute terms. This performance underpins current market focus on whether authorities will act again and how domestic policy will evolve.