Japan Weighs Currency Intervention as Yen Plummets 7% in Three Months

The yen's sharp decline follows Prime Minister Sanae Takaichi's growth-focused agenda, which explicitly rules out monetary tightening. With the Bank of Japan showing no urgency to raise rates, the currency remains vulnerable to further depreciation. Government intervention now appears increasingly likely.

BoJ officials have begun signaling vigilance, with 'close market monitoring' typically preceding direct action. However, Japan faces a policy dilemma—bound by G20 agreements favoring market-determined exchange rates, yet permitted to act during periods of disorderly trading. Current conditions may already meet that threshold.

The weak yen delivers mixed economic impacts. While boosting export competitiveness and tourism, it severely strains households through rising import costs—particularly for energy and food. This inflationary pressure, unaccompanied by wage growth, has become a political lightning rod that unseated two previous premiers.