SINGAPORE, November 21, 2025 – Japan is on the verge of another currency intervention as the yen hovers near a 10-month low, raising concerns about the potential ineffectiveness of yen-buying operations unless accompanied by Bank of Japan (BOJ) rate hikes. Analysts caution that authorities must act carefully to prevent a renewed selloff in the world’s third-largest currency.

Yen Weakness Spurs Intervention Threats

The Japanese yen has weakened sharply in recent weeks, driven by expansionary government spending proposals under Prime Minister Sanae Takaichi and a record ¥21.3 trillion ($135 billion) stimulus package. Finance Minister Satsuki Katayama has warned that authorities may intervene if market moves become disorderly or excessive, signaling a readiness to step in should the yen approach the 158–162 per dollar range.

Historically, previous interventions in 2022, April–May 2024, and July 2024 provided temporary relief, but analysts suggest the current conditions may limit their effectiveness. Bo Zhuang, global macro strategist at Loomis Sayles, explained:
“Initial intervention might actually bring some cover for further buildup in short positions, which means more investors could continue selling the yen… after a few hours, the market might turn the other direction.”

Key Intervention Levels and Market Risks

The yen is currently trading at 156.7 per dollar, approaching the 38-year trough of 161.96, which triggered a $40 billion intervention in July 2024. Analysts view 160 yen per dollar as a critical test for authorities, with the potential for further yen depreciation to 165 if intervention does not occur.

Junya Tanase, chief Japan currency strategist at J.P. Morgan, noted:
“Although there is no pre-set ‘line in the sand’ for intervention, people clearly remember last year’s intervention range of 157 to 162 yen. If no action occurs near 160, traders may speculate that intervention stance has weakened, leading to aggressive selling.”

Structural Challenges for the Yen

Despite efforts to stabilize the currency, the yen continues to face downward pressure due to:

• Large interest rate differentials with the U.S.
• Limited positioning in yen options markets
• High long-term Japanese government bond yields amid concerns over financing the stimulus

Investors are closely monitoring the BOJ’s policy response, with speculation mounting that a rate hike could occur as early as December, potentially strengthening the yen. Rong Ren Goh, portfolio manager at Eastspring Investments, commented:
“What would really help steady the currency is if the BOJ finally delivers a rate hike, potentially as early as December. Frankly, it feels like the time has come to act.”

Implications for Investors

A persistent weak yen increases market volatility and poses challenges for importers, exporters, and global investors. While short-term interventions may provide temporary relief, analysts stress that structural monetary adjustments, including interest rate hikes, are critical to sustaining long-term stability in the yen.