Japanese finance minister warns of bold action as yen nears 160

Friday 27 March 2026 - 16:40

By: Dakir Madiha

Japanese finance minister warns of bold action as yen nears 160

The USD/JPY pair traded just below the key 160.00 level Friday. Japanese Finance Minister Satsuki Katayama issued her strongest intervention warning yet against the yen's persistent slide, driven by soaring oil prices and Middle East tensions.

Katayama told reporters Friday that authorities must respond firmly, including bold measures. The remark signals direct currency market action in Japanese policy jargon, per Bloomberg. The pair hit 159.85 Thursday before easing to around 159.5 Friday.

Middle East conflict accelerates yen pressure. Brent settled above $108 per barrel Thursday after a nearly 6 percent single-session surge, Reuters reports. Japan imports 90 percent of its oil from the region, leaving the yen exposed to energy inflation. The currency weakened about 2.35 percent over the past month.

Unlike 2022 and 2024 interventions tied to carry trade speculation, current yen softness stems from fundamental dollar demand and energy costs. Reuters cites a Mitsubishi UFJ Morgan Stanley Securities FX strategist who doubts intervention effectiveness now. Dollar safe-haven flows may persist until Middle East stabilization.

Bank of Japan held its policy rate at 0.75 percent in March by an 8-1 vote. Hawkish member Hajime Takata sought a rise to 1.00 percent. Brown Brothers Harriman's Elias Haddad noted Friday the pair firms just below 160.00. BBH economists expect a 25-basis-point hike to 1.00 percent at the April 28 BOJ meeting, already priced in by two-thirds of markets.

BOJ Governor Kazuo Ueda called Middle East economic impacts temporary but left room for further hikes. The US Federal Reserve's restrictive stance and 63 percent odds of steady rates through year-end widen US-Japan yield gaps, propping up the dollar.

Market players view 160 as the intervention trigger. Japanese authorities acted multiple times in 2024 when the yen crossed that line. MUFG Bank's Teppei Ino warned verbal signals alone may fail to hold it. Official rhetoric likely won't shift market sentiment much, he added.