On December 24, 2024, Finance Minister Katsunobu Kato expressed strong concern over the yen weakening to the 157 level against the dollar, marking its lowest point in five months. Speaking at a press conference after a cabinet meeting, Kato stated that "we are seeing one-sided and rapid movements," expressing worry over forex market dynamics including speculative activity. He emphasized the government's readiness to "respond appropriately to excessive movements," sending a clear warning to currency markets.

The message was that no measure is off the table, direct currency intervention included. Following the remarks, the yen strengthened to 156.92 per dollar, showing that the market had heard the warning.

Over ¥15 Trillion in Yen-Buying Interventions in 2024

Japan's monetary authorities conducted four currency interventions in 2024: roughly ¥9.7 trillion between late April and early May, and about ¥5.5 trillion in July. The July operations broke down as ¥3.1678 trillion of dollar selling on the 11th and ¥2.367 trillion on the 12th, bringing the annual total above ¥15 trillion.

In July, the yen temporarily weakened to the upper 161 range before authorities pushed it back to the 157 level through intervention. However, downward pressure on the yen has remained persistent, with the currency sliding back to 157 by year-end.

Widening US-Japan Interest Rate Differential Drives Weakness

The primary driver of yen weakness is the interest rate differential between the US and Japan. The United States raised rates aggressively from 2022 to combat inflation, leaving the federal funds rate at 4.25-4.50% as of late 2024. The Bank of Japan ended its negative interest rate policy in March 2024 and lifted its policy rate to 0.25% in July, then stopped there. Long-term rates remain in the low 1% range. The gap runs to roughly four points.

At the December FOMC meeting, the Federal Reserve indicated that the pace of rate cuts in 2025 would be more gradual than previously anticipated. That strengthened expectations the differential will persist, intensifying yen-selling pressure. Until the gap narrows, most of the market reads the trend as unchanged.

Rising Living Costs and Widening Corporate Divide

The effects are not uniform. Rising import prices for crude oil and food have added to household burdens, and Japan's reliance on imported energy and food means currency weakness feeds almost directly into shelf prices.

Exporters, by contrast, gain. Automakers and other firms with high export ratios have seen profits lifted by favorable exchange rates, and the surge in inbound tourism is another dividend of the cheap yen.

Thin Year-End Markets and the Next Line of Defense

Some market participants see the yen weakening into the 160-165 range. But liquidity thins over the year-end and New Year period, so intervention now would swing prices harder, which also makes fresh yen-selling positions awkward to build.

Some analysts think authorities will hold off until the yen reaches 161, where the last interventions came. BOJ Governor Kazuo Ueda, who refrained from a further hike at the December policy meeting, said he wanted to see the incoming US administration's economic policies and 2025 wage trends first. Monetary policy could shift the pressure on the yen from that side too.

[Update] The next yen-buying intervention came 16 months after this article. On April 30, 2026, with the dollar-yen at the upper 160s, its weakest since July 2024, the government and the BOJ sold dollars and bought yen, pulling the currency back to the 155 range at one point. Finance Ministry figures put intervention between April 28 and May 27 at roughly ¥11.7 trillion. By then the finance minister was Satsuki Katayama, not Kato, with Vice Minister for International Affairs Atsushi Mimura running the operation. The trigger had changed too: tension over Iran and higher oil prices, not the rate gap alone (as of August 2026).

In the end, the yen is pulled by several forces at once: US monetary policy, the pace of Japan's normalization, and confidence in the Japanese economy itself. A cheap currency is a tailwind for exporters but a weight on everyday shopping. In your country, is a weaker currency something people welcome, or something they worry about?