Japan Intervenes to Support Yen in FX Market

Japanese authorities intervened in the foreign exchange market on Thursday, buying yen and selling U.S. dollars to counter the currency's sharp decline against the dollar, marking the first such action in nearly two years.

The move, executed by the Ministry of Finance and the Bank of Japan, propelled the yen up as much as 3 percent intraday. The dollar fell to 155.57 yen, its strongest level against the yen since early March, before recovering somewhat to trade around 156.50 to 157 yen later in the session. Trading volumes spiked significantly, with estimates suggesting authorities spent tens of billions of dollars in one of the largest single-day interventions on record.

The intervention followed explicit warnings from top officials. Finance Minister Satsuki Katayama stated earlier that day that the timing for "decisive action" was nearing. Currency diplomat Atsushi Mimura described rising speculative moves in the market and issued what he called a "final evacuation warning" to traders, saying, "I think market players would know what I mean." Officials had been in contact with U.S. counterparts, in line with Group of Seven guidelines on currency stability.