Japan steps up intervention threats after yen falls past 32-year low

Japanese authorities made fresh threats of intervention in the currency market on Thursday after the yen fell beyond the psychological level of $150, keeping investors on high alert if Tokyo returns to the market to support the currency.

After the yen broke the symbolic mark for the first time since 1990, top foreign exchange diplomat Masato Kanda told reporters that officials are “always ready to take necessary action as excessive volatility has become increasingly unacceptable”.

Kanda, deputy finance minister for international affairs, said earlier on Thursday that he would not comment on whether Japan would intervene now or enter the currency market.

Breaking the 150 level adds pressure for Tokyo to enter the currency market again to stem the yen’s relentless decline, which is adding to the country’s already soaring import bill.

The decline also puts the Bank of Japan in the spotlight ahead of a policy meeting next week, when it is expected to keep its ultra-low interest rate responsible for pushing the yen lower.

Japanese Finance Minister Shunichi Suzuki also told reporters after the yen’s latest fall that he will “take decisive action” against the yen’s excessive and sharp moves.

For its part, Japan’s central bank has stepped up efforts to defend its 0% ceiling on bond yields, with offers on Thursday for emergency bond purchases.

Japanese officials have signaled that they are looking at the speed of the yen’s movements, rather than targeting a specific level, when deciding whether to intervene.

While market concerns over intervention have slowed the pace of the yen’s declines, analysts expect the yen to remain in a downtrend as long as the Bank of Japan remains an exception amid a global wave of central banks raising interest rates, including the Federal Reserve.