Finance Minister: Japan is ready to take action in the foreign exchange market.
The Bank of Japan discussed in October the need to continue raising interest rates.
The Japanese yen rose in Asian markets on Wednesday against a basket of major and minor currencies, continuing its upward movement for the third consecutive day against the US dollar, following a strongly worded warning from Japanese authorities indicating Tokyo's readiness to intervene to support the local currency.
According to the minutes of the October meeting, Bank of Japan policymakers discussed the need to continue raising interest rates to levels considered neutral for the economy, and several of the nine board members pointed out that recent declines in the value of the yen could lead to hyperinflation as a result of higher import costs.
Price overview
Today's Japanese Yen exchange rate: The dollar fell against the yen by 0.4% to (155.55 ¥), from today's opening price of (156.21 ¥), and recorded a high of (156.28 ¥).
The yen ended Tuesday's trading up about 0.4% against the dollar, its second consecutive daily gain, after a strongly worded Japanese warning about excessive movements of the local currency.
Japanese authorities
Japanese Finance Minister Satsuki Katayama confirmed that Japan has the freedom to take bold measures to deal with excessive volatility in the yen.
Katayama stressed at a press conference on Tuesday that the recent movements in the local currency's exchange rate do not reflect market fundamentals at all, but are driven by speculation, giving Tokyo the pretext to intervene in the market if necessary.
Katayama indicated that the government would take appropriate measures to counter excessive movements, based on Japan's September agreement with the United States on exchange rate policy.
Early Monday morning in Tokyo, Japan’s top currency diplomat, Atsuki Mimura, and government spokesman Minoru Kihara both expressed concern about the “sharp and volatile” movements in the foreign exchange market.
They stressed that Japanese authorities are closely monitoring currency developments, warning that officials are prepared to take appropriate action when necessary, in a clear indication of the possibility of intervention to curb excessive volatility.
Bank of Japan
According to the minutes of the Bank of Japan's October meeting, released today in Tokyo, Bank of Japan monetary policymakers discussed the need to continue raising interest rates to levels considered neutral for the economy, with some arguing that this would help achieve stable long-term growth.
Several of the nine board members pointed out that recent declines in the value of the yen could lead to hyperinflation as a result of higher import costs.
At its meeting on October 29-30, the Bank of Japan kept interest rates unchanged at 0.5%, but Governor Kazuo Ueda strongly hinted at a possible rate hike in the near term. The two hawkish members, Hajime Takata and Naiki Tamura, opposed this view and unsuccessfully proposed raising rates to 0.75%.
At its subsequent meeting this December, the central bank raised interest rates to 0.75%, the highest level since September 1995, marking the second increase in 2025 after a previous increase last January.
The minutes of the October meeting showed that many members already believe conditions are favorable for raising interest rates, but they want more clarity on whether companies will continue to raise wages next year given the ongoing uncertainty about the impact of increased US tariffs.
Japanese interest rate
The pricing in the probability of the Bank of Japan raising interest rates by a quarter of a percentage point at its next January meeting remains stable at around 20%.
In order to reprice those probabilities, investors are awaiting further data on inflation, unemployment and wage levels in Japan.
