The Japanese central bank's two key activities saw the yen continuing to weaken, prompting the finance minister to issue another intervention warning.

Before two possible market-affecting activities by the Bank of Japan this week, the Japanese yen continues to show weakness. At the same time, Japanese authorities have issued more warnings about the speculative trends of the yen. Japanese Finance Minister Katsunobu Kato stated: "I am deeply concerned about the recent movements in the yen exchange rate, including those driven by speculators." He reiterated: "The government will take appropriate actions to prevent excessive exchange rate fluctuations." Katsunobu Kato's warning is a standard hint from Japanese authorities about possible intervention in the foreign exchange market. Following Katsunobu Kato's speech, the yen strengthened against the US dollar, briefly touching 157.06 yen to the dollar. Prior to Katsunobu Kato's remarks, the exchange rate was 157.39 yen to the dollar. Bank of Japan Governor Haruhiko Kuroda is set to speak on Wednesday. The Bank of Japan will release a summary of opinions from the December monetary policy meeting's deliberations committee on Friday. For Japanese monetary authorities, the risk of further weakening of the yen remains a concern. Analysts say that the low liquidity in the market during the holiday period increases the potential for significant market volatility, but it could also make any intervention measures more effective. Takeshi Ishida, a forex strategist at Kansai Mirai Bank, stated: "As the USD/JPY exchange rate approaches 160, tensions may escalate regarding whether Japanese authorities will intervene." "If they intervene in a low liquidity environment, the extent of the yen's appreciation may be larger." Since the USD/JPY exchange rate touched 160 in July, Japanese authorities have stayed away from the foreign exchange market. So far this year, Japanese authorities have spent nearly $100 billion to support the yen. Some analysts believe that the potential threshold for Japanese authorities to intervene in the foreign exchange market would be the 161.95 level reached in July. At the time of Katsunobu Kato's statements, the yen faced pressure again since last week, mainly due to expectations that the interest rate gap between the US and Japan will take longer to narrow. Last week, after the Bank of Japan decided to keep rates unchanged and Kuroda expressed a cautious attitude towards raising rates, the yen plummeted. Additionally, the Federal Reserve released hawkish signals last week, hinting at a slower pace of rate cuts next year. Market participants will closely watch Kuroda's speech on Wednesday to see if his tone changes. If Kuroda reiterates that the Bank of Japan may delay hiking rates, it could further weaken the yen. The summary of opinions from the Bank of Japan's December monetary policy meeting's deliberations committee, to be released on Friday, may provide more details on committee member Naoki Tamura's proposal for a rate hike, which could help strengthen the yen. However, if the summary mainly focuses on the need for a more cautious approach to rate hikes, the yen could fall once again. Tohru Sasaki, Chief Strategist at Fukuoka Financial Group, stated: "If Japanese authorities intervene now, it may not be effective because the US dollar is also strengthening, which could result in unnecessary impacts. They may postpone intervention until the USD/JPY exchange rate exceeds 160, the level at which they last intervened."