Japan to Intervene Again? Bank of Japan Reportedly Conducts Exchange Rate Survey, Yen Narrows Losses

The Bank of Japan has reportedly conducted a rate check, causing the yen’s intraday decline to moderate and raising market attention to potential renewed intervention by Japanese authorities in the forex market.

In the late morning of U.S. Eastern time on Friday, September 18, Japanese media reported that the Bank of Japan asked market participants about the exchange rate levels in the FX market. The yen immediately narrowed its intraday losses; early in the U.S. session, the USD/JPY rate fell below 156.80, narrowing its intraday gain to about 0.5%, and later to nearly 0.4%.

Previously, during the European trading session, USD/JPY had broken above 158.00, a new two-week high, with an increase of over 1% on the day. Despite news of the Bank of Japan’s rate check, the yen remains set to fall for a fourth consecutive session.

The yen’s sudden rebound occurred after the Bank of Japan’s September policy meeting. Two policymakers voted against the widely expected rate hike, drawing market attention to speculation regarding the BoJ’s future monetary tightening path.

Regarding the rate check, the key focus in the market is whether Japanese authorities are preparing for further intervention in the FX market, and whether the yen’s persistent weakness is approaching the policy tolerance limit.

Rate check sends out intervention warning, but does not mean Japanese authorities have acted

According to Nikkei News, the Bank of Japan has already conducted a rate check in the foreign exchange market, asking market participants about exchange rate levels.

Media found that after this news, the yen jumped by more than 1 yen against the dollar at one point.

A rate check is usually when the government consults financial institutions about specific FX levels or market conditions to understand the trading environment. The market often views this as a precursor signal for possible intervention, as such inquiries may indicate the government is assessing the timing and market reaction to entering the market.

However, a rate check itself does not mean the Japanese government has actually bought yen. The Bank of Japan is responsible for executing relevant operations, while decision-making power over FX intervention mainly rests with the Ministry of Finance. Whether real action will be taken still awaits official confirmation or subsequent data.

The yen weakens for four consecutive days; rate hikes fail to lift FX rate

The yen declined for the fourth straight trading day on Friday, touching a two-week low during the European session. Earlier, the Bank of Japan announced its rate decision, and although it raised rates as widely expected, two policymakers voted against, causing doubts in the market about the future path of rate hikes.

On Friday, September 18 local time, after the BoJ’s monetary policy meeting, it announced raising the policy rate to 1.25%, the highest in 31 years. However, the decision was not unanimous among the policy board members, and the forward guidance for further tightening failed to meet some market participants’ expectations.

After the BoJ meeting, the yen came under pressure and USD/JPY extended gains, at one point surging past 158.00 during the European session, the highest since September 3, with intraday gains exceeding 1.3%.

This also highlights the dilemma facing Japanese monetary policy: even if the BoJ continues to raise rates, if the market believes the future hike pace will be slow, the yen could still be suppressed by interest rate differentials and a strong US dollar.

Japan has intervened twice on a massive scale this year, with rare Japan-U.S. joint yen buying

Japanese authorities have already taken several actions to stabilize the yen exchange rate this year. Data released by the Ministry of Finance shows a huge scale of intervention:

• April 28 to May 27: According to data released by the Ministry of Finance on May 29, during this period, total FX intervention in Japan reached 11.73 trillion yen, which is about $73.8 billion at an exchange rate of 159 per dollar.

• July 30 to August 26: According to data released by the Ministry of Finance on August 29, the Japanese government intervened in the FX market with 15.4 trillion yen during this period, a new record high for monthly intervention.

• Late July Japan-U.S. coordinated action: On August 3, the Ministry of Finance confirmed that on July 31, it carried out a coordinated yen-buying intervention with the U.S. Treasury to curb the yen’s recent sharp volatility.

Japan-U.S. joint intervention is particularly rare. Barring special periods such as financial crises or major natural disasters, the two countries rarely coordinate FX interventions; this is also the first such joint action to stabilize the yen since the Great East Japan Earthquake of 2011.

Previously, with the yen under pressure due to a strong U.S. dollar and U.S.-Japan interest differentials, Japanese authorities have repeatedly sent stabilization signals through verbal warnings, rate checks, and actual interventions.

Market focus: Will actual intervention follow the rate check?

After this rate check news broke, the yen rebounded rapidly, showing that the market remains highly sensitive to potential action from Japanese authorities.

But whether the rate check will translate into concrete intervention still depends on further moves in the yen and the authorities’ judgement. Should the yen continue to weaken, the Japanese government could face increasing pressure to stabilize the FX rate; meanwhile, the Bank of Japan’s future rate hike path, the U.S. rates outlook, and the dollar trend will continue to affect the yen’s direction.

For traders, what matters next is not only whether Japanese authorities confirm rate checking, but also whether there are actual yen-buying interventions, and whether the Bank of Japan can shift market expectations around the rate differential through subsequent policy signals.