Japan Finance Minister Satsuki Katayama said the government will act decisively if necessary to stabilize the yen against the U.S. dollar.
The warnings come as the yen reaches its lowest level in nearly four decades, threatening economic stability through increased import costs and volatile market conditions.
For two consecutive days, July 22 and 23, Katayama utilized verbal intervention to discourage further currency depreciation [3]. This strategy, known as "verbal intervention," aims to signal the government's readiness to enter the market without immediately spending reserves.
The currency has plummeted to approximately 163 yen per U.S. dollar [1]. According to government data, this represents a level of weakness not seen in 39 years and seven months [2].
Katayama maintained a firm tone during her public addresses this week. "Our stance has not changed at all. We will act decisively if and when it is necessary," she said [4].
In a separate statement, Katayama said that the government remains vigilant. "We will take measures whenever necessary. Our stance does not change at all," she said [5].
The Japanese government typically monitors the speed and scale of currency fluctuations rather than the specific exchange rate. However, the rapid slide toward the 163-yen mark has pushed the administration toward more frequent public warnings to deter speculators from betting further against the yen.
“"We will act decisively if and when it is necessary,"”
The repeated use of verbal intervention suggests that the Japanese government is attempting to avoid the high cost of direct market intervention, where it would sell U.S. dollars and buy yen, while still trying to curb volatility. However, when a currency hits a 39-year low, markets often view verbal warnings as insufficient, which may force the Ministry of Finance to eventually commit actual capital to prevent a systemic economic shock.
