Sharp moves spark talk of official action
The Japanese yen saw erratic trading on Friday after two abrupt surges triggered speculation that authorities may have carried out so-called rate checks, a step often viewed as a warning signal ahead of possible currency intervention.
The yen was last trading firmer at around 155.86 per dollar, after briefly weakening to nearly 159.2 per dollar, close to an 18-month low, during comments from Bank of Japan Governor Kazuo Ueda following the central bank’s decision to keep interest rates unchanged.
Rate checks add to market anxiety
Shortly after Ueda’s press conference, the yen strengthened sharply to about 157.3 per dollar. Market participants largely agreed that direct intervention was unlikely, but suggested authorities may have contacted banks to assess potential intervention pricing.
A rate check allows officials to signal readiness to step into currency markets without immediately deploying reserves. With no major headlines driving the move, traders pointed to persistent bearish sentiment and heightened sensitivity to intervention risks.
Fiscal concerns weigh on the yen
The Japanese currency has faced sustained pressure since Prime Minister Sanae Takaichi took office in October. The yen has fallen more than 4% amid concerns over fiscal policy, including proposed tax cuts and rising government debt.
Earlier this week, a sharp selloff in Japanese government bonds pushed yields to record highs after Takaichi called snap elections for February. Although yields have partially retreated, investor confidence remains fragile.
Dollar weakens amid geopolitical shifts
In broader currency markets, the U.S. dollar was on track for its steepest weekly decline since June as geopolitical tensions unsettled investors. The dollar index slipped to around 97.57, down more than 1% on the week.
The euro climbed to approximately $1.181 and was set for a weekly gain of over 1%, supported by political stability in France after the government survived two no-confidence votes. Sterling traded near $1.362 after stronger-than-expected UK retail sales data, though the figures had limited impact on the pound.
