FX.co ★ Yen Weakness Triggers Verbal Warnings

The Japanese yen hovered near the psychologically important 160-per-dollar level on Friday after facing sustained selling pressure throughout the week, prompting authorities to issue renewed warnings about potential intervention in the currency markets. Finance Minister Satsuki Katayama said Japanese officials would remain in close contact with their US counterparts and stand ready to take appropriate action if needed to counter excessive and rapid moves in the foreign exchange market. Japan’s top currency diplomat, Atsushi Mimura, also cautioned investors not to overlook last summer’s episode, when Japanese and US authorities jointly intervened in the FX market to support the yen. The currency’s latest slide has been driven largely by broad-based US dollar strength, fueled by rising expectations of more aggressive Federal Reserve rate hikes following stronger-than-expected US inflation data and increasingly hawkish commentary from Fed officials.