Sunday, June 7Sunday, June 7The yen hovered near a psychologically sensitive 160-per-dollar level on Friday, prompting fresh warnings from Tokyo that authorities stand ready to act after foreign-exchange reserves tumbled by $77 billion in May alone.
Japan’s currency has weakened steadily this week despite two prior rounds of suspected intervention, and the dollar last traded at ¥159.85, according to market data cited by the Wall Street Journal . Prime Minister Fumio Kishida told reporters that defending the yen will require structural measures—tax reform, wage growth, and productivity gains—rather than one-off currency operations. “We will take decisive action when necessary,” he said, echoing language used during the Bank of Japan’s April intervention.
The scale of the intervention is now clearer: Japan’s foreign reserves fell to $1.18 trillion in May, the steepest monthly drop since records began, Reuters reported . Analysts at Goldman Sachs estimate that Tokyo spent roughly $60 billion in the first week of June alone to slow the slide, underscoring the limits of even large-scale liquidity raids when global risk sentiment favors the dollar.
The greenback has been buoyed by robust U.S. economic data—jobless claims fell to 210,000 and the ISM services index rose to 54.2 in May—while geopolitical tensions in the Gulf keep oil prices elevated and support safe-haven flows into Treasuries . “The market is pricing in a higher-for-longer Fed,” said a senior strategist at Mizuho Securities in Tokyo. “Until that changes, the yen faces persistent pressure.”
Tokyo’s verbal intervention has intensified. Finance Minister Shunichi Suzuki told parliament on Thursday that authorities “will not tolerate excessive volatility,” and the Bank of Japan’s deputy governor, Ryozo Himino, warned that disorderly moves could harm financial stability . Yet the yen’s slide has resumed each time intervention signals fade, suggesting that structural reforms—not just currency defense—are now the priority.
With the yen flirting with levels last seen in 1990, investors are watching for signs that Tokyo will widen its toolkit to include tighter capital controls or even a surprise rate hike. For now, the message from Kishida’s government is clear: economic strength, not repeated interventions, is the ultimate safeguard.
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