Intervention risks are heating up again! After Japan and the U.S. successively sent signals, Japan's top currency official called out: the market should take this seriously.

Japan's top currency official, Atsushi Mimura, said on Monday that the market should take seriously the "very clear" message sent by Tokyo and Washington last week regarding the yen. The remarks signaled that he is prepared to take action to curb excessive yen depreciation. As of press time, the USD/JPY exchange rate edged lower, quoted at 156.75. Japanese Finance Minister Satsuki Katayama on Friday gave an unusually detailed account of discussions between U.S. and Japanese leaders on exchange rates. Katayama said that U.S. President Trump expressed concern about the weak yen when he held a summit with Japanese Prime Minister Sanae Takaichi. As a signal of the joint determination of Tokyo and Washington to address yen weakness, Katayama and U.S. Treasury Secretary Bessent reaffirmed in a phone call last Friday that the yen's undervaluation is a concerning issue. Speaking about the recent depreciation of the yen in an interview, Mimura said: "The Japanese Prime Minister, the Finance Minister, and the U.S. side have already sent a very clear message. The market should take this message at face value." He also said: "I will closely watch whether the market will continue to take this message seriously." Although Mimura declined to comment on whether Japan might intervene again to support the yen, he said he is neither "dissatisfied" nor "reassured" about the yen's recent movements indicating that Tokyo remains vigilant about the risk of another yen decline. The Bank of Japan raised interest rates by 25 basis points as expected this month, lifting the benchmark rate to 1.25%, the highest level in 31 years. But the rate hike, widely anticipated by the market, failed to boost the yen, which instead weakened. The market believes that BOJ Governor Kazuo Ueda's remarks at the post-decision press conference disappointed investors who had expected more hawkish comments. In addition to Ueda's insufficiently hawkish remarks, two members of the BOJ's monetary policy committee voted against the rate hike, also raising concerns about the central bank being "not hawkish enough." It is reported that among the nine policy board members, Toichiro Asada and Ayano Sato cast dissenting votes. Asada's reason was that the CPI increase excluding fresh food was below 2%, and "the economic situation is not necessarily strong"; Sato believed that the economic and price situation had not accelerated significantly, and "raising rates at this time is not appropriate." As a result, traders are betting that Japanese policymakers will struggle to keep pace with global central banks turning hawkish which will keep a large gap between Japanese interest rates and those of major economies, and the yen may continue to face pressure against the dollar. Strategists believe that given the yen's continued depreciation after the BOJ's September 18 policy meeting, 160 yen per dollar has once again become the level that tests Japan's tolerance for yen weakness. However, the growing threat of intervention itself may curb the yen's decline. But whether intervention can bring about a lasting reversal may largely depend on whether the United States participates, because historically, when monetary policy fundamentals remain unfavorable, Japan's unilateral operations have often struggled to produce sustained effects. The United States joined the effort to support the yen this summer, increasing the risks facing investors betting against the yen. U.S. Treasury Secretary Bessent has repeatedly signaled support for a stronger yen, even saying bluntly that he is "the house" on the yen exchange rate, warning traders shorting the yen "not to bet against him." Ray Attrill, head of foreign exchange strategy at National Australia Bank, said: "It is entirely possible for the USD/JPY exchange rate to return to 160, but I expect the threat of intervention will prevent a breakthrough of this threshold." He added that whether the United States will further support Japan may depend on whether Japan is willing to raise interest rates faster or by a larger margin than the market currently expects.