Japan's Finance Minister Repeats FX Warning as Yen Nears 162

Japanese authorities stepped up their rhetoric on the currency as the yen lingered near 162 to the dollar, close to multi-decade lows, keeping the risk of official intervention firmly in view. Finance Minister Satsuki Katayama repeated warnings about excessive and disorderly foreign exchange moves, remarks that have periodically jolted markets and driven bursts of yen strength. The persistent weakness reflects the wide gap between Japanese interest rates and those elsewhere, alongside the country's trade and structural deficits, even after the Bank of Japan lifted its policy rate to 1% in June. Central bank officials have signalled they intend to continue tightening gradually: board members have argued the policy rate should move toward a neutral level of around 2% at intervals of a few months, and warned that delaying adjustments could risk a sharper downturn later or allow underlying inflation to overshoot the 2% target. Deputy governors have pointed to accelerating wholesale inflation as firms pass on higher import costs. Markets are weighing how far and how fast the Bank of Japan can normalise policy without destabilising bonds or the currency.