The yen strengthened 1.2 percent against the dollar on Friday, reaching ¥156.94 per dollar—its strongest session since Sept. 7 and outperforming all Group-of-10 peers.
The move followed high-level discussions on currency intervention. Prime Minister Sanae Takaichi told President Donald Trump that an undervalued yen is "problematic," while Treasury Secretary Scott Bessent discussed "the desirability of a strong yen" with Finance Minister Satsuki Katayama.
Moh Siong Sim, strategist at Oversea-Chinese Banking Corp. said that "intervention risk should put a ceiling on further yen weakness," adding that "the yen may be nearing a turning point as Trump's concerns over its weakness point to deeper U.S.-Japan coordination to support the currency."
The currency has faced depreciation pressure from expectations of further Federal Reserve rate increases, which widen the interest-rate differential between the U.S. and Japan. The Bank of Japan's uncertain tightening pace has compounded weakness, pushing the yen toward the critical ¥160-per-dollar level this week. Market participants view ¥160 as a heightened intervention risk zone.
Options sentiment has shifted bullish, signaling increased hedging demand against potential intervention. Commodity Futures Trading Commission data released Friday showed leveraged traders trimmed bullish yen positions in the week ending Tuesday, after turning positive on the currency for the first time since mid-2025 one week prior.
Japan and the U.S. executed their first coordinated yen-buying intervention since 1998 in early August after the currency weakened past ¥160. Finance Ministry data showed Japan spent a record ¥15.4 trillion, or $97.4 billion, on intervention through Aug. 26, underscoring the intensity of official support needed to defend the level.
