USD/JPY fell 2.25% on Thursday after a drastic reversal in intraday trading that saw the pair lose about 500 pips in just a few hours.
Prices surged to multi-month highs around 160.75 in early London trading before falling sharply to test 155.55. The 3.22% peak-to-trough move marked the sharpest daily drop in more than three years and abruptly halted a sustained rally that had carried the pair from the mid-150s throughout April.
Early Warning From Tokyo
The move was triggered by a coordinated escalation from Tokyo. Finance Minister Satsuki Katayama warned earlier in the day that authorities were “approaching the time to take bold action” on foreign exchange, and Deputy Finance Minister Atsushi Mimura complemented the statement with what he described as “final advice” to Yen sellers.
Later, Nikkei reported, citing government sources, that the Ministry of Finance (MoF) and the Bank of Japan (BoJ) had carried out direct intervention buying Yen and selling Dollars, the first such reported action since the 2024 episode that ultimately involved around $62 billion.
Whether this move will last is still an open question; the Federal Reserve (Fed) currently has rates between 3.50% and 3.75% compared to the BoJ’s base rate of 0.75%, and the carry-trade incentive that has weakened the Yen all year is not structurally undermined by just one day of official selling.
