The Japanese yen stabilized near 18-month lows on Thursday, as investors remained cautious about the risk of currency intervention following strong verbal warnings from Japanese officials ahead of a snap national election. The yen hovered around 158.63 per dollar, after strengthening about 0.4% the previous day, but remained close to the recent low of 159.45, highlighting ongoing pressure on the currency.
Concerns over yen depreciation have intensified since Prime Minister Sanae Takaichi took office in October, with the currency sliding nearly 5% amid fears over her proposed fiscal spending plans. Her decision to dissolve the lower house of parliament next week and call an early election has sparked selloffs in both the yen and Japanese government bonds, amplifying worries about Japan’s already massive debt burden. These fiscal uncertainties have complicated the outlook for the Bank of Japan’s monetary policy path and pushed the yen closer to levels that previously triggered intervention.
Japanese Finance Minister Satsuki Katayama reiterated warnings against “one-sided depreciation,” while U.S. Treasury Secretary Scott Bessent also called for measures to curb excessive foreign exchange volatility. Analysts note that markets are closely watching whether official rhetoric will be backed by concrete action. Japan last intervened in July 2024, spending nearly $37 billion to support the yen when it weakened to around 161.96 per dollar, a 38-year low.
Strategists suggest that intervention risk could rise if the yen moves further into the 161–163 range, especially with thinner liquidity expected due to an upcoming U.S. holiday. Meanwhile, the Bank of Japan is set to meet next week, with expectations that it will hold rates steady after raising them last month to a 30-year high of 0.75%.
Globally, the U.S. dollar steadied after earlier volatility linked to concerns over Federal Reserve independence under President Donald Trump. Despite political tensions, investors are refocusing on U.S. economic data and the interest rate outlook, while risk-sensitive currencies like the Australian and New Zealand dollars weakened slightly.
Overall, the yen remains vulnerable as election-driven fiscal concerns, intervention risks, and central bank policy uncertainty continue to dominate market sentiment.


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