The Japanese yen strengthened sharply against the US dollar on Wednesday, September 2, as traders weighed the prospect of further interest rate rises by the Bank of Japan and possible official efforts to curb the currency’s weakness.
The yen climbed as high as 155.21 to the dollar before giving back some of its gains. It was last up 0.79 per cent at 158.92, having earlier traded as weakly as 160.39.
The move came after the currency had retraced about half of the gains made following a rare joint intervention by the United States and Japan at the end of July. Before that action, the yen had fallen to a 40-year low of 163.98 to the dollar. ([investing.com](https://www.investing.com/news/economy-news/yen-gains-sharply-against-us-dollar-4886411))
Markets were offered no immediate explanation for the latest rally, prompting speculation that Washington or Tokyo may have carried out a so-called rate check. The process involves asking financial institutions to provide exchange-rate quotations without actually buying or selling currency.
Chris Scicluna, head of economic research at Daiwa Capital Markets Europe, said the scale of the move made it a convenient moment for the US or Japan to conduct such a check after comments from the Bank of Japan.
Hajime Takata, a member of the Bank of Japan’s policy board, said in a speech in Sapporo that the central bank should respond nimbly to mounting inflationary pressure rather than follow a fixed timetable for raising rates. The Bank of Japan published the speech on September 2. ([boj.or.jp](https://www.boj.or.jp/en/about/press/koen_2026/ko260902a.htm))
Governor Kazuo Ueda had also signalled a strong possibility of a rate increase this month. Separately, US Treasury Secretary Scott Bessent expressed support for decisive Japanese market and monetary measures to address what the Treasury described as the yen’s substantial undervaluation and its contribution to domestic inflationary pressure. ([home.treasury.gov](https://home.treasury.gov/news/press-releases/readout-secretary-treasury-scott-bessent-s-meeting-bank-japan-governor-kazuo-ueda/?utm_source=openai))
Analysts remained divided over whether Wednesday’s currency movement reflected direct intervention. Hank Calenti, chief strategist at SMBC EMEA, said the thin market conditions could have made intervention possible, while Takafumi Onodera of Mitsubishi UFJ Trust and Banking said the gains were still too limited to point conclusively to an official operation.
“Unless the yen strengthens further from here, the magnitude of the move does not suggest direct market intervention,” Mr Onodera said.
The yen’s longer-term weakness has been driven in part by the wide gap between US and Japanese interest rates, which has encouraged investors to favour dollar-denominated assets. Eric Theoret, a currency strategist at Scotiabank, said the yen’s earlier return above 160 suggested investors remained unconvinced that its recovery had a firm economic foundation. ([investing.com](https://www.investing.com/news/economy-news/yen-gains-sharply-against-us-dollar-4886411))
