With Brent surging to a new post war high overnight, rising as high as $125 on fear of an imminent resumption of hostilities in Iran, which dragged yields higher, and also pushed the USDJPY above 160 for the first time since late March, overnight Japan made clear - again - it wouldn't take it any more, with the usual round of jawboning.
- *KATAYAMA: WE ARE MONITORING FX MARKET WHILE YOU ARE ON HOLIDAY
- *KATAYAMA: WE ARE NEARING TIMING TO TAKE BOLD ACTION ON FX
Then
- *MIMURA: WE ARE NEARING TIME TO TAKE BOLD ACTION ON FX
- *MIMURA: THIS IS MY FINAL WARNING BEFORE ACTION
Then
- *JAPAN PM TAKAICHI HOLDS PHONE TALKS WITH IRAN PRESIDENT: KYODO
- JAPAN PM TAKAICHI: I HAVE WORKED TO ENSURE PASSAGE OF JAPANESE-RELATED VESSEL THROUGH STRAIT OF HORMUZ" RTRS
And while the market had grown used to constant jawboning by Japanese officials, this time Japan finally put its money where its mouth was, and with the USDJPY extending gains after all this verbal diarrhea, at precisely 4am ET, or just as Japan was closing (as we head into a long weekend, with most of Asia off tomorrow and Japan kicking off with golden week starting Monday to Wednesday 6th May), the USDJPY tumbled sharply, and then continued to slide for the next 4 hours, plunging as much as 500 pips to a session low of 155.57.
The move which strengthened the yen by the most since 2023...
... immediately prompted speculation of intervention by Japan's authorities, especially since in recent weeks Japan had been jawboning not only against the yen but also oil prices, which mysteriously also tumbled from a multi year high.
There were early signs that Japan was indeed involved, with some 57BN in USDJPY volumes this morning, far above normal average. Note, previous intervention volumes in 2022 and 2024, EBS volumes had gotten up to around 70BN (for 29apr24 and 21oct22). On Friday 23 January 2026 on US rate check day – EBS volumes got to around 50BN.
And while normally we would have to wait days if not weeks for confirmation that the BOJ was in the market, today mercifully we got confirmation early on when the Nikkei reported that the Japanese Finance Ministry and the Bank of Japan carried out exchange rate intervention to buy yen and sell dollars on Thursday. A government official confirmed to Nikkei fact of intervention in an interview with the Nikkei.
"The government and the Bank of Japan intervened again, buying yen, causing the yen to surge against the dollar to the 155 yen target", the Nikkei reported.
There was no immediate comment on whether the BOJ was also intervening in oil, but it would not be surprising if they did (although it would be a first).
The problem for Japan, and the reason why the MOF/BOJ had held out for this long before intervening, is that by doing so they have once again blown their load, so to speak, and now the USDJPY has a clear path to rise even higher - our target is now 170 and potentially much higher since the BOJ so stubbornly refuses to raise rates, which means that either the yen or JGBs will have to be the buffer for Japan's surging inflation.