Yen Firms as Tokyo Signals Readiness to Act on FX Volatility

Key Moments

Yen Edges Higher After Intervention Rhetoric

At the start of the week, renewed warnings from senior Japanese policymakers gave the yen a modest lift. Specifically, comments from top currency official Atsushi Mimura pushed USD/JPY down by roughly half a big figure. As a result, the pair slipped from near 157.75 to around 157.25.

On Monday, Mimura said authorities remain “concerned” about recent FX moves. He described them as “one-sided and sharp.” Moreover, he warned that officials would take “appropriate actions” against excessive volatility. Although the language was familiar, its timing mattered. Consequently, some traders trimmed short-yen positions after last week’s central bank meeting.

I warned everyone if the YEN value slides to quickly that Bank of Japan would call an emergency 🆘 meeting

Looks like I was correct @TheMoneyApe

“On Monday, Atsushi Mimura, Japan’s vice finance minister for international affairs and the country’s top currency diplomat, warned… pic.twitter.com/6natak9Xrt

— CryptoBlockParty 🧩 (@CryptoBlckParty) December 22, 2025

Growing Policy Unease Over Yen Weakness

These remarks followed similar comments late last week from Finance Minister Satsuki Katayama. She also warned that Tokyo would respond to excessive and speculative yen moves. Taken together, the statements highlight rising unease in government circles.

In particular, officials appear concerned about the speed of the yen’s decline. Higher import costs and pressure on household budgets add to those worries. So far, USD/JPY has adjusted in a measured way rather than abruptly. Even so, the move reinforces the view that tolerance for further sharp depreciation is limited.

For now, verbal intervention seems aimed at slowing momentum. Rather than forcing a reversal, policymakers appear focused on discouraging disorderly moves.

AUD/JPY Backed by Yield Differentials

Elsewhere, analysis from Commonwealth Bank of Australia pointed to continued support for AUD/JPY. The cross benefits from steady risk sentiment. More importantly, it draws strength from widening yield gaps between Australian and Japanese 10-year government bonds.

Because of this, CBA expects AUD/JPY to climb to 109 by March 2026. While intervention risks may briefly slow yen weakness, broader yield dynamics still favor higher levels over time.

How Japan’s FX Decision-Making Works

Atsushi Mimura serves as Japan’s vice finance minister for international affairs. In effect, he is the country’s top currency diplomat. He also holds day-to-day responsibility for foreign-exchange policy decisions.

In practice, Mimura decides whether Japan intervenes in FX markets. He acts under the finance minister’s authority and coordinates closely with the Bank of Japan. When needed, the BOJ executes intervention on his instruction.

Meanwhile, Mimura monitors market conditions closely. He assesses whether moves are excessive, speculative, or disorderly. He also delivers verbal warnings that often precede action. When intervention is approved, he directs the BOJ to buy yen. Typically, these operations aim to stabilise sharp moves rather than target specific exchange-rate levels.