Japan Reportedly Intervened in Forex Market to Support Yen
Japan reportedly stepped into the foreign exchange market during the Golden Week holidays in early May to support the Japanese yen, according to a Reuters report published on Friday.
The intervention was primarily aimed at reducing speculative pressure against the yen after the USD/JPY currency pair surged above the important 160 yen level in late April.
Yen Stabilizes After Sharp Volatility
The Japanese yen traded relatively stable on Friday, with the USD/JPY pair holding near 156.85.
Earlier this week, the pair briefly dropped toward the 155 level, marking the yen’s strongest position against the U.S. dollar since late February.
Tokyo has historically used holiday periods to intervene in currency markets due to lower trading volumes and thinner liquidity, which can amplify the impact of large market operations.
BOJ May Have Spent Up to $32 Billion
According to Reuters calculations based on Bank of Japan money market data, Japanese authorities may have spent as much as 5 trillion yen, or approximately $32 billion, during the early May intervention efforts.
Currency intervention by Japan typically involves the Bank of Japan purchasing yen in the open market to strengthen the currency and limit excessive volatility.
The central bank has also recently intervened to counter the negative impact of the Iran conflict on the yen.
Markets Watch for Potential BOJ Rate Hike
Analysts at OCBC said they remain cautious about the possibility of sustained yen strength despite expectations for a potential interest rate increase from the Bank of Japan in June.
The analysts noted that Japanese monetary policy still remains relatively accommodative, limiting long-term support for the yen. OCBC maintained its end-2026 forecast for the USD/JPY pair at 155.
Expectations for a June rate hike increased after Japan released stronger-than-expected wage growth data for March.
Although the Bank of Japan kept interest rates unchanged during its latest meeting, policymakers signaled that further rate hikes remain possible if inflation continues to rise in line with official forecasts.
