Yen Rallies After 'Final Evacuation Warning' to Currency Speculators

A weakening Japanese yen abruptly reversed course after government officials signaled potential intervention in the currency market. The yen breached the closely watched 160-per-dollar level late local time yesterday, and continued sliding today. The 160 mark is widely viewed as Japanese authorities' line in the sand, and officials previously intervened once the currency reached similar levels in 2024. While Japan's finance minister did not explicitly mention intervention today, she said she is closely watching foreign exchange moves. Top currency diplomat Atsushi Mimura echoed her comments in a message to currency speculators, saying this is "the final evacuation warning." After the comments, the strengthened to around 157 per dollar. The yen has been weakening for much of this year, weighed down by concerns about Prime Minister Sanae Takaichi's fiscal spending plans and the Bank of Japan's slow-moving rate hikes. Traders have also piled into bets against the currency. But its fall reached new levels yesterday, after the Federal Reserve signaled a more hawkish view on interest rates. Higher rates in the U.S. tend to support a stronger dollar versus other currencies.