06:10 AM EDT, 03/19/2026 (MT Newswires) -- The yen (JPY) has held up better against the US dollar (USD) overnight Wednesday, supported by the Bank of Japan's latest policy update and further verbal intervention from Japanese policymakers, said MUFG.

It has helped to prevent USD/JPY from rising above the 160.00 level after hitting a high of 159.87, wrote the bank in a note to clients. Finance Minister Satsuki Katayama reiterated that the government is "prepared to do utmost to respond to FX moves any time," and that they "have a high sense of urgency against FX moves."

The comments indicate a high risk of Japan intervening if USD/JPY rises back above the 160.00 level and moves closer to the high from July 2024 at 161.95, stated MUFG.

BoJ Governor Kazuo Ueda acknowledged at Thursday's policy meeting that the rise in oil prices will put upward pressure on inflation in Japan. As a result, "slightly more" board members noted upside risks for prices.

The governor still expects the inflation trend to rise gradually and will watch the impact of oil prices on the inflation trend. Ueda added that higher oil prices could raise inflation expectations. He repeated guidance that the BoJ plans to keep raising rates if its economic outlook materializes.

On the other hand, the governor also noted that high oil prices would weigh on the economy if prolonged. The updated guidance leaves the door open for another hike as soon as the next policy meeting in April, although there was no clear signal it will be delivered.

Instead, Governor Ueda signaled that the BoJ will decide policy meeting by meeting. The BoJ's next policy meeting is not until April 28 and a lot could happen before then in the current environment, so it makes sense that the BoJ didn't strongly commit to an April hike on Thursday, added MUFG.

A bigger and more disruptive energy price shock could yet discourage the BoJ from hiking rates again as soon as next month, pointed out the bank.

Governor Ueda also highlighted that the BoJ is closely watching yen weakness. He stated that the weaker yen may boost inflation expectations alongside higher energy prices. Ueda emphasized that the BoJ needs to watch the impact of foreign exchange on prices, and reiterated that foreign exchange may have more impact on prices compared with earlier periods.

The weaker yen is continuing to put pressure on the BoJ to hike rates further, according to the bank. While Thursday's BoJ policy update leaned more on the hawkish side, it is unlikely to be sufficient on its own to reverse the yen's weakening trend.