Yen stays near a 10-month low

The yen briefly popped higher in early Asian trading after Japanese Finance Minister Satsuki Katayama said intervention was a possibility to deal with excessively volatile and speculative moves

The yen languished near a 10-month low on Friday but found some support as Japanese officials stepped in to stem the currency’s decline.

The yen briefly popped higher in early Asian trading after Japanese Finance Minister Satsuki Katayama said intervention was a possibility to deal with excessively volatile and speculative moves, leaving traders on alert for signs of yen buying from Tokyo.

That stemmed its decline, with the yen gaining 0.2% to 157.12 per dollar, though it remained not far from Thursday’s 10-month low of 157.90. It was still on track to drop 1.6% for the week.

Much of the focus in currency markets this week has been on the yen, which has hit new lows as investors worry about the nation’s worsening fiscal position brought about by Prime Minister Sanae Takaichi’s spending policies.

Takaichi’s cabinet approved a 21.3 trillion yen ($135.40 billion) economic stimulus package on Friday.

The elephant in the room now is mounting intervention risks, said Vishnu Varathan, head of macro research for Asia ex-Japan at Mizuho. Interventions are likely to be opportunistic and short-lived. Essentially, speed bumps, not barricades.

Tokyo last spent 5.53 trillion yen, or nearly $37 billion, in July 2024 to intervene in the foreign exchange market to haul the yen away from 38-year lows.

Against the euro, the yen was pinned near a record low and last stood at 181.33. Sterling hovered near a 16-month high at 205.71 yen.

Against the dollar, the euro stood at $1.1542 and was on track for a weekly decline of 0.7%.

Sterling gained 0.2% to $1.3096, though it was set to lose 0.8% for the week, with investors also anxiously awaiting Britain’s upcoming budget, a major test for the nation’s currency and bond markets.