Japan Suspected of Record $53 Billion Yen-Support Intervention, USD/JPY Volatile

Japan is widely suspected of stepping into FX markets with a massive yen-buying operation worth about $53 billion, putting fresh downward pressure on USD/JPY as authorities sought to slow the currency's slide toward levels last seen roughly four decades ago. Market estimates suggest Tokyo spent around ¥8.45 trillion ($52.8 billion) on Thursday, based on movements in central bank accounts and projections from money brokers. If confirmed, it would rank as Japan's largest single-day currency intervention. The move followed renewed yen weakness after the currency slipped past 163 per dollar earlier this month, intensifying concerns over rising import costs. Reports said the buying took place during New York hours, marking Japan's first yen-support operation in three months. The yen surged as much as 3%, driving USD/JPY from near 164 to below 158. The move later pared after the Bank of Japan left rates unchanged at 1%. USD/JPY bounced back above 160 before settling around 159. Finance Minister Satsuki Katayama declined to confirm any intervention, saying Japan was "always ready to respond with a sense of urgency" to exchange-rate moves. Attention has also turned to possible U.S. backing. Japan's top currency official Atsushi Mimura did not confirm the operation but said Japan was receiving U.S. support that "goes beyond psychological support." Asked whether this could include "rate checks"—requests for dealers' currency quotes that often precede market action—Mimura said such support "would include" them. U.S. Treasury Secretary Scott Bessent said Japan may have acted to support the yen and was reported to have added that the yen "seems very undervalued to me." No official statement indicated U.S. authorities sold dollars directly. South Korea also reportedly sold dollars on Thursday to support the won. The won rose roughly 2% to a nine-month high before giving back some gains. The coordinated timing underscored how weakening Asian currencies have been amplifying imported energy costs, with higher oil prices linked to Middle East tensions adding to the pressure. The BOJ's policy path remains a key driver for USD/JPY. While the central bank kept its policy rate at 1%, one board member favored raising it to 1.25%, with the majority opting to hold steady. Markets are now focused on Governor Kazuo Ueda's guidance on the pace of future hikes. A faster tightening path could underpin the yen; a cautious stance risks renewed downside pressure. Japan previously spent ¥11.7 trillion (about $73 billion) between late April and early May to support the yen, according to Source: X. That effort delivered only a temporary rebound before the currency weakened to fresh lows. The latest suspected operation faces a similar test: large-scale yen buying can damp sharp moves, but sustained strength typically depends on interest rates, inflation, oil prices, and the dollar's broader direction. Asian equities rose as currency stress eased and technology shares rallied. Japan's Nikkei climbed about 5%, while South Korea's KOSPI and Taiwan's Taiex also advanced. A stronger yen can also ripple through global risk assets because traders often borrow in yen to fund positions in stocks and crypto; abrupt yen gains can force deleveraging. With intervention offering only temporary support and USD/JPY still holding above 159 after the BOJ decision, traders are watching for further signals from Japanese officials and Governor Ueda on whether currency operations will be reinforced by a quicker rate-hike trajectory.