Yen Steadies as Intervention Threat Persists

The Japanese yen stabilized on Monday after falling around 2% during the previous week, with USD/JPY around 156.85. The weakness has increased speculation that Japanese authorities could intervene in the currency market, particularly after reports that officials conducted rate checks. The Bank of Japan recently raised its policy rate to 1.25%, its highest level in 31 years, but the decision failed to strengthen the yen because two policymakers dissented and the guidance was not considered sufficiently hawkish. At the same time, the Federal Reserve’s hawkish stance continues to support the dollar, leaving the yen caught between BOJ policy and the much stronger U.S. rate outlook.