Japan has intensified its warning over yen weakness after the currency remained under pressure despite higher Japanese interest rates. Atsushi Mimura, Japan’s vice finance minister for international affairs and top currency diplomat, said markets should take the recent message from Tokyo and Washington seriously, placing renewed focus on the risk of official action in the foreign-exchange market.

Tokyo Sends a Stronger Signal on Yen Weakness

Mimura said Japan’s prime minister, finance minister and the United States had delivered a “very clear” message on the yen and that markets should take it at face value. He also said he would be watching closely whether investors continued to respond to that warning, while declining to comment on whether Japan could intervene again.

The comments followed discussions between Japanese Finance Minister Satsuki Katayama and U.S. Treasury Secretary Scott Bessent, who reaffirmed that yen undervaluation was a concern. U.S. President Donald Trump has also raised the issue of yen weakness with Japanese Prime Minister Sanae Takaichi, adding an international dimension to Tokyo’s efforts to stabilize the currency.

Why the Yen Remains Under Pressure

The yen has remained weak despite a significant shift in Japanese monetary policy. The Bank of Japan has raised its policy rate to 1.25%, the highest level in 31 years, but the currency continues to trade around ¥157 per dollar as relatively high U.S. interest rates and a strong dollar maintain pressure on the exchange rate.

Higher Japanese rates can gradually reduce the interest-rate gap that has encouraged investors to fund positions in yen and invest in higher-yielding assets elsewhere. However, the adjustment has not yet been sufficient to eliminate the underlying pressure on the currency. A persistent weak yen also raises the cost of imported energy and raw materials, making the exchange rate an important consideration for Japanese inflation and household purchasing power.

Intervention Risk Returns to the Market

The central question for currency markets is whether Tokyo’s increasingly explicit warnings will be followed by direct intervention. Japanese authorities have previously intervened to support the yen, but Mimura has avoided specifying a particular exchange-rate level that would trigger action.

That ambiguity allows policymakers to preserve flexibility while attempting to influence market expectations. At the same time, repeated verbal warnings can lose effectiveness if traders conclude that authorities are unwilling to act. The recent coordination with Washington gives Japan’s message additional weight, although monetary-policy differences between the two countries remain a major driver of exchange rates.

Markets will therefore monitor USD/JPY closely alongside U.S. Treasury yields, Federal Reserve expectations, Japanese inflation and wage data, and signals from the BOJ. Any renewed acceleration in yen depreciation could increase pressure on Japanese officials to consider stronger measures, while evidence of narrowing interest-rate differentials could provide a more durable source of support for the currency.