Japan’s top currency diplomat issues final warning before action in FX market

• No comment on FX level
• In close contact with our US counterpart
• Closely coordinating with US based on our FX agreement in September last year
• This is my final warning before action

The Japanese yen extended the gains following these comments from Mimura. Earlier we got a verbal intervention from Japanese Finance Minister Katayama. This is good news for JPY sellers as they get better levels where to enter from.

As mentioned previously and as seen countless times in the past, interventions are useless if the fundamentals don’t change. What’s been weighing the most on the JPY this week were the dovish BoJ Governor Ueda’s comments as he noted that they want to take a little bit more time in gauging how the Middle East situation would affect Japan’s economy and acknowledged that underlying inflation is currently a bit below the 2% target.

He added that they expect underlying inflation to be around 2% from second half 2026 but admitted that he doesn’t know how many months it would take to gauge timing of their next rate hike.

So, you have the energy shock weighing on economic activity, a neutral BoJ, a dovish PM and other central banks getting more hawkish. There’s literally nothing supporting the upside for the JPY.