BOJ Intervenes to Support Yen, Keeps Rate at 1.0%

The Bank of Japan intervened in currency markets to support the yen near 160 per U.S. dollar and the Policy Board voted 8-1 to maintain the uncollateralized overnight call rate at about 1.0 percent. Policy Board member Hajime Takata cast the lone vote for a 25 basis-point increase. Japan’s benchmark rate is at its highest level since 1995.

The yen strengthened as much as 3.5% against the dollar before retreating. The Korean won rose about 1% and South Korean equities, led by semiconductor stocks, recovered from recent losses. Market reports said the Bank of Korea and the BoJ acted in coordination.

Participants in financial markets observed U.S. authorities conducting so-called “rate checks” during trading, a soft signal that can precede coordinated foreign-exchange operations. Japanese officials did not provide a running commentary on the intervention.

The BoJ confirmed in its policy statement that it will encourage the overnight call rate to remain around 1.0 percent and that officials will monitor monetary and foreign-exchange developments. The board’s decision to hold rates came at the bank’s scheduled meeting and matched prior investor expectations.

In its quarterly Outlook for Economic Activity and Prices, the BoJ said year-on-year consumer price inflation is likely to accelerate to a level clearly above 2 percent from the second half of fiscal 2026. The report cited rising prices for durable goods and said the effects of previously high crude oil costs were waning because of disruptions to key oil transit routes linked to the U.S.-Iran conflict.

Lee Min-hyuk, an analyst at KB Kookmin Bank, said the mutual interests of the two countries made coordinated action feasible and that a joint intervention could amplify the impact because the won and the yen move closely together. Masahiko Loo, senior fixed income strategist at State Street Investment Management, noted officials signaled discomfort with excessive yen weakness and suggested a tolerance zone around 162–165 rather than a single trigger level.

Officials said they will continue to monitor inflation expectations and global risks as they assess future policy and foreign-exchange developments.