Japan escalates forex intervention threat as yen nears 160 per dollar

By Kentaro Sugiyama and Makiko Yamazaki

TOKYO, Jan 14 (Reuters) - Japanese authorities said on Wednesday they would not rule out any options to counter foreign exchange volatility, escalating their verbal threat of intervention as the yen sank to its lowest levels since Tokyo last intervened in the market.

"We'll take appropriate action against excessive currency moves without excluding any options," Finance Minister Satsuki Katayama said on Wednesday, signalling the possibility of intervention after the yen hit 159.45 per dollar, its weakest level since July 2024.

"It's extremely regrettable and we are concerned," Katayama told reporters, describing recent sharp exchange-rate moves as out of line with fundamentals.

The remarks came as the yen slid near the 160-to-the-dollar mark, a psychologically important threshold seen by many market players as the government's line in the sand that heightens the chance of currency intervention.

Japan last intervened in the currency market in July 2024, when the yen fell to a 38-year low of around 161.96 to the dollar.

Japan's top currency diplomat Atsushi Mimura also told reporters that recent yen moves were "one-sided and rapid," threatening to take action against excessive currency moves without ruling out any options.

When asked whether the options included intervention, he said: "I won't offer any comment that lays all my cards on the table."

"What's most problematic is volatility and whether the moves are deemed appropriate in light of economic fundamentals," Mimura said. "If they're not necessarily so, it would mean the moves are driven by speculation so we'll need to take action."

The yen's recent sharp declines are driven by market expectations that Prime Minister Sanae Takaichi will call a snap election and, if she emerges victorious, escalate her expansionary fiscal policies.

The weak yen has been a headache for policymakers as it inflates import costs and pushes up the cost of living for households. It could also affect Takaichi's popularity ratings.

"Generally speaking, there can be both advantages and disadvantages of the weaker yen," Mimura said. "But it is also true that, as a result of the weaker yen, we are indeed hearing various voices pointing out the disadvantages stemming from import‑driven inflation."

After meeting U.S. Treasury Secretary Scott Bessent in Washington on Tuesday, Katayama said the two shared concerns over what she described as the yen's "one-sided depreciation."