Japan’s authorities prepare to act on USD/JPY near 160 as wage growth and inflation risks justify policy shifts.
Japan’s government and central bank are intensifying efforts to strengthen the yen, with USD/JPY trading near 160. Authorities, including the Finance Ministry and Bank of Japan, have signaled readiness to intervene in currency markets and raise interest rates if inflation risks persist.
Recent data supports policy normalization, with April wage growth accelerating to 3.5% year-over-year and household spending declining only 0.5%. Japan’s foreign reserves fell by USD 77bn in May, reflecting recent intervention costs of over USD 73bn to support the yen.
Prime Minister Sanae Takaichi emphasized boosting long-term competitiveness through domestic investment and supply chain security, while Finance Minister Satsuki Katayama reiterated vigilance in monitoring markets.