Overview
- The yen rebounded to roughly ¥156.3–¥156.8 per dollar after Finance Minister Satsuki Katayama said Japan has a “free hand” to counter excessive moves and top currency diplomat Atsushi Mimura warned against “one-sided, sharp” swings.
- The Bank of Japan lifted its policy rate to 0.75% on Dec. 19 with data‑dependent guidance, a telegraphed move that saw the yen slide to multi‑month lows and 10‑year JGB yields jump above 2% to multi‑decade highs.
- Intervention risk is viewed as rising as dollar/yen approaches the ¥160 area, with references to last year’s roughly US$100 billion in yen‑support operations and cautions that thin holiday liquidity could amplify any action.
- Former BOJ officials offered projections of further tightening, with Makoto Sakurai seeing rates potentially reaching around 1.5% over Governor Ueda’s term and Seiji Adachi warning that expansive fiscal policy could drive more yen weakness and higher yields.
- Analysts say negative Japanese real rates and revived carry trades continue to pressure the currency, even as a softer U.S. dollar helped USD/JPY retreat from recent highs.