Published: Tuesday, January 13, 2026 · 8:57 AM | Updated: Tuesday, January 13, 2026 · 8:57 AM
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(Bloomberg) — The yen slid to its weakest level in 18 months despite Japan’s finance minister and her US counterpart uniting in their concern over the currency’s slide.
Japan’s currency fell as much as 0.6% to 159.05 per dollar, with losses accelerating after local media outlet Kyodo reported that Prime Minister Sanae Takaichi told a senior member of the ruling Liberal Democratic Party that she intends to call a snap election. The development is seen as reviving the so-called “Takaichi trade,” which has weighed on government bonds and kept the yen under pressure.
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The currency’s losses deepened even after Japanese Finance Minister Satsuki Katayama said she had expressed her “concerns about the one-way weakening of the yen” at a meeting with her US counterpart Scott Bessent. “Treasury Secretary Bessent shares those concerns,” Katayama told reporters during a briefing following the talks in Washington.
A Finance Ministry official who attended the meeting said that the two nations will continue to communicate closely regarding currency developments at the deputy ministerial level. The meeting in Washington may spur speculation that Katayama was seeking a green light from the US to intervene in the market.
“The risk of currency intervention will likely come back into focus,” said Rinto Maruyama, FX and rates strategist at SMBC Nikko Securities Inc. The yen at 160 against the dollar “will be closely watched as the intervention line,” he said.
While the weaker yen is likely to inflate the profits of Japan’s biggest exporters and helped to push the stock index to a fresh record high on Tuesday, the wider business community is getting increasingly concerned about the yen’s fall.
The head of Japan’s largest business lobby, Keidanren, said an adjustment that leads to a stronger yen is needed.
“A currency ultimately reflects that country’s strength and the current yen depreciation is a bit excessive,” Yoshinobu Tsutsui, Keidanren’s chair, said on Tuesday afternoon. “In excessive circumstances, intervention in the foreign exchange market may be warranted.”
Japanese authorities intervened in the market on four occasions in 2024 when the currency traded around 160, establishing a rough reference point for where action could take place going forward. Katayama’s emphasis on one-way moves points to the sort of disorderly swings in the market that officials have said might be a trigger for further action.
Katayama warned in December, when the yen weakened past the 157 mark, that Japan has a “free hand” to take action in the market if needed.
“As we broke into the 158 big handle, I am expecting Japanese officials’ comments to start trickling through the headlines as media will be questioning them on the levels as the dollar approaches 160 yen,” said Bart Wakabayashi, Tokyo branch manager at State Street Bank & Trust. “They would be looking to slow any volatile moves and letting the market know there are no ‘one way’ trades.”
The weak yen threatens to put added upward pressure on prices owing to more costly imports. Takaichi has sought to mitigate the impact of rising costs of living with a massive stimulus package that includes subsidies to lower utility costs.
Most economists expect the central bank to wait until June before moving again after it raised the rate in December to the highest in three decades, but the yen’s continued slide may increase pressure on the BOJ to raise its benchmark rate sooner rather than later.
Bessent has called for the Bank of Japan to raise interest rates as a step toward boosting the yen.
The BOJ may raise its benchmark interest rates as early as April due to market concerns over Takaichi’s approach to fiscal policy, former board member Makoto Sakurai said in an interview.
“I think the Takaichi administration would also want to put a brake on the weak yen,” said Atsushi Takeda, chief economist at Itochu Research Institute.
The meeting between Katayama and Bessent came against the backdrop of fresh concerns over potential political interference in US monetary policy after the Federal Reserve faced fresh legal action from the Justice Department. Chair Jerome Powell said on Sunday the central bank had been served grand jury subpoenas, threatening a criminal indictment tied to his June testimony on headquarter renovations.
Even with the dollar under broad pressure from that development, the yen continued to slide on Tuesday.
Katayama met with Bessent on the sidelines of a meeting of global financial authorities on rare earths. She noted that bolstering supply chains was a critical task. Bessent outlined US plans to create resilient, secure and diversified supply chains during the meeting, according to a statement released by the Treasury.
–With assistance from Takahiko Hyuga, Keiko Ujikane, Yoshiaki Nohara and Brian Fowler.
(Updates with business lobby’s comments)
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