Yen's Jump to 156.34 Revives Bets on Further Japan Intervention

The yen jumped more than 1 percent to 156.34 per dollar Thursday, its strongest in a month, reviving bets that Japan's Ministry of Finance will extend a record 15.4 trillion yen intervention campaign.

"I have information that the market doesn't have. And it's my belief that the Japanese government and that the BOJ will do the things that will lead to a stronger yen," Scott Bessent, US Treasury Secretary, said at the Group of 20 finance leaders' gathering in Asheville, North Carolina.

The move follows Japan's disclosure that it spent a record 15.4 trillion yen, about $96.4 billion, defending the currency between July 30 and Aug. 26, with the US joining a coordinated yen-buying effort on July 31 — the first such joint action since 1998. The yen had since surrendered most of those gains, sliding from a post-intervention high near 155.2 back toward the psychologically critical 160 level that has historically triggered intervention.

The question now is whether the Ministry of Finance steps back in. Bessent signaled that recent yen moves were not disorderly enough to warrant another joint foray into currency markets, instead pressing the Bank of Japan to raise interest rates and urging Tokyo to demonstrate fiscal sustainability. In meetings with BOJ Governor Kazuo Ueda and Finance Minister Satsuki Katayama on the sidelines of the G20, he argued the era of Abenomics-style massive stimulus should be considered over.

Markets are already pricing in the shift. Overnight swap markets reflect a 73 percent probability of a BOJ rate hike at the Sept. 17-18 policy meeting, having at one point implied an 88 percent likelihood. Japan's 10-year government bond yield surged to 3 percent on Tuesday, the first time since 1996, reflecting both domestic tightening expectations and the global bond selloff that has pushed the US 10-year yield to about 4.78 percent, its highest since early 2025.

Analysts at Oxford Economics now forecast three BOJ hikes over the coming year — in September, December and April 2027 — a faster pace than previously anticipated. Yet strategists caution that a single rate increase will be insufficient to sustainably move the yen away from 160, given that US yields remain elevated, oil prices are climbing and Japan's terms of trade continue to deteriorate. Brent crude has risen above $91 a barrel after renewed military exchanges between the US and Iran, adding to inflation pressure that keeps major central banks on a restrictive footing.

The stakes extend well beyond Tokyo. Japan remains the largest foreign holder of US government debt, and any large-scale Treasury liquidation to fund yen intervention would directly worsen the US bond selloff. Bessent has acknowledged that disorderly yen volatility could raise borrowing costs for American households and businesses, framing the issue as a domestic concern rather than a purely foreign policy matter. The convergence of hawkish Federal Reserve rhetoric from Chairman Kevin Warsh, escalating Middle East hostilities and persistent yen weakness has left global fixed-income markets unusually fragile heading into September.

The last time the US and Japan intervened jointly was in 1998, when the yen's slide toward 147 prompted coordinated buying that helped stabilize the currency for months. Whether this campaign proves as durable depends on the BOJ delivering the rate path Bessent expects — and on whether the Ministry of Finance deems the yen's latest jump enough to hold the line without further action. If the currency stalls short of 160 and rate expectations firm, Tokyo may hold its fire; if it slips back toward that threshold, another round of yen-buying looks increasingly likely before the BOJ's September meeting.

This article is for informational purposes only and does not constitute investment advice.