By Makiko Yamazaki
TOKYO, June 2 (Reuters) – Japanese financial authorities held back from stepping up verbal warnings on the yen on Tuesday even as it neared the key 160-per-dollar mark, a restraint analysts say reflects caution after recent interventions delivered only fleeting impact.
“We retain our stance of being ready to respond in the currency market as needed,” Japanese Finance Minister Satsuki Katayama told a press conference on Tuesday, repeating her standard line while warning against speculative moves.
The tone marked a clear step down from April 30, when Katayama said that the timing for “decisive action” was approaching, remarks soon followed by a fresh round of massive interventions.
Data from the U.S. Commodity Futures Trading Commission showed net short positions in the yen rose to 114,667 contracts in late May, the largest since July 2024, when Japan previously intervened, suggesting markets are again probing the authorities’ tolerance for further weakness.
Analysts say the softer rhetoric points to reluctance to act prematurely after April-May interventions quickly lost traction.
Japan spent 11.7 trillion yen since April to support the yen in what was the largest-ever intervention round in a month in terms of size. The yen jumped to around 155 per dollar from 160.725, but later resumed its decline.
On Tuesday, the currency was nearing the 160 level, widely seen in markets as a line in the sand for potential official intervention.
“There may be a sense they would rather wait for a higher (dollar/yen) level to maximize the impact and avoid criticism of wasting resources,” Shota Ryu, FX strategist at Mitsubishi UFJ Morgan Stanley Securities, said.
Ryu added that effective intervention would likely require U.S. coordination, something that may be difficult as Washington grapples with its own inflation concerns and has little incentive to support a weaker dollar or endorse aggressive yen-buying operations.
Katayama said at Tuesday’s press conference that Japan was closely coordinating with U.S. authorities on currency moves.
At home, calls are growing for the government to address structural causes of yen weakness.
“To bring the yen back toward an appreciation trend, stopgap market interventions are completely meaningless,” veteran ruling party lawmaker Taro Kono said in an X post on Sunday. “First, the government should stop signalling in ways that restrain the BOJ from raising policy interest rates.”
Markets are now focussed on a speech by Bank of Japan Governor Kazuo Ueda on Wednesday for possible clues on whether a rate hike could follow later this month.
The BOJ kept interest rates steady in April, but strongly signalled the chance of a near-term hike due to mounting inflationary pressures.
(Reporting by Makiko Yamazaki and Leika Kihara; Editing by Jacqueline Wong and Shri Navaratnam)
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