Atsushi Takeuchi, a former central bank official who participated in Tokyo’s market operations roughly a decade ago, said Japan can probably hold off on direct intervention in the foreign exchange market for the time being because recent coordinated measures have helped stop a unilateral decline in the yen.
Speaking in an interview, Takeuchi pointed to suspected rate checks conducted by the New York Federal Reserve on Friday as an unusually forceful signal of Washington’s willingness to align with Tokyo’s efforts to check sharp falls in the currency. "The presence of the U.S. made a huge difference as markets know they shouldn’t fight the Fed," he said.
Takeuchi explained that authorities’ principal aim was to prevent a one-sided, sharp slide in the yen rather than to defend a particular exchange rate level. "What authorities wanted to stop was a one-sided, sharp slide in the yen," he said, adding that policy makers were concentrating more on the pattern of moves than on fixed numeric thresholds.
He argued that recent market tension created by suspected rate checks has discouraged aggressive yen selling. "Now with suspected rate checks keeping markets on edge and preventing yen bears from testing the currency’s downside, Japan probably doesn’t need to directly intervene," Takeuchi said.
Takeuchi warned that if Tokyo were to enter the market to prop up the yen immediately, that action could paradoxically accelerate the currency’s appreciation and have a negative impact on stock prices. He noted that Japanese authorities might be sensitive to that trade-off as Prime Minister Sanae Takaichi prepares for an election next month.
Market moves over the past few days have included a more than 1% surge in the yen to 152.10 per dollar on Tuesday, reaching a three-month high amid talk of coordinated U.S.-Japan rate checks. Those suspected checks followed a period in which the yen had weakened toward the psychologically significant 160 per dollar level, a point that market participants view as raising the likelihood of yen-buying intervention.
Takeuchi described the recent episodes of sharp yen spikes as evidence that Japanese authorities have succeeded in a largely psychological contest with market participants. "The biggest job of Japan’s top currency diplomat is to heighten and keep alive market fears of intervention," he said. "So far, Japan has succeeded in doing so."
Historically, Japan’s interventions often aimed at preventing abrupt yen strengthening that could harm its export-reliant industries. Since 2022, however, policy attention has shifted toward guarding the currency against excessive depreciation, which authorities view as a threat that can stoke inflation and erode consumer purchasing power.
Takeuchi took part in several yen-selling interventions between 2010 and 2012. He currently serves as chief research fellow at the Ricoh Institute of Sustainability and Business.
Note: This article summarizes the views expressed by Takeuchi in the interview and outlines recent market developments he cited. It does not add new data beyond those remarks.