Japanese authorities may tolerate a gradual yen decline but could intervene if the currency weakens sharply toward 160 per dollar, according to Atsushi Takeuchi, a former Bank of Japan official involved in past FX interventions.
Takeuchi told Reuters that the yen’s slide has so far been manageable, but “alarm bells will start ringing” if markets begin discussing the risk of a deeper plunge to 160 or 170. “If the yen falls that much, authorities could and must step in,” he said, adding that while intervention would not change the overall trend, it could temporarily halt excessive moves.
The comments came as the yen was headed for its steepest weekly drop in a year, trading around 153 per dollar on Friday, following Sanae Takaichi’s victory in the ruling party leadership race. Her dovish fiscal stance and emphasis on stimulus have lowered expectations for a near-term BOJ rate hike.
Takeuchi said the currency could stabilise as the US–Japan rate gap narrows, with the Fed likely to cut rates while the BOJ eventually tightens policy. But he warned that yen losses could accelerate if Takaichi appears comfortable with further weakness, despite her public remarks that the yen has both “pros and cons.”
Finance Minister Shunichi Kato also reiterated Friday that Tokyo is monitoring “excessive and disorderly” FX moves. Market participants see 160 per dollar as a key threshold that could trigger direct intervention.
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