Japan’s warnings of potential FX intervention fail to curb yen weakness amid a widening US-Japan rate gap and geopolitical risks.
The USD/JPY pair extended its recovery from Friday’s low near 160.50, climbing toward 162.00 in Asian trading on Monday. The move reflects persistent demand for carry trades despite Japanese officials’ repeated threats of currency intervention.
Japan’s Finance Minister and Chief Cabinet Secretary reiterated readiness to act against excessive yen volatility, echoing statements from last week. However, the BoJ’s policy rate remains at 1.00%, far below the Fed’s 3.5%-3.75% range, sustaining the yen’s downside pressure.
Geopolitical tensions in the Middle East, including Iran’s plans to impose new shipping fees, further weighed on the yen. Traders remain cautious but continue to favor the dollar amid the rate differential.