The Japanese yen edged higher in Asian trading on Tuesday against a basket of major and minor currencies, attempting to recover from a two-year low against the US dollar as bargain-buying activity emerged at lower levels.

The yen's proximity to its weakest levels in four decades has prompted Japanese authorities to intensify efforts to support the currency and curb excessive foreign exchange market movements. Japanese Finance Minister Satsuki Katayama held an online meeting with US Treasury Secretary Scott Bessent to discuss potential policy measures for addressing the yen's historic weakness.

The Price

Japanese yen exchange rate today: The dollar fell less than 0.1% against the yen to 161.48, from an opening level of 161.56. The session high was recorded at 161.64.

The yen ended Monday down 0.2% against the dollar, touching a two-year low of 161.93, close to its 40-year low of 161.95.

Japanese authorities

Japanese authorities continue to closely monitor currency market movements as the yen approaches its weakest levels in 40 years after breaking above the key 160-per-dollar threshold. The level is widely viewed as a red line that could prompt renewed intervention to support the currency.

Intensified efforts

Japanese Finance Minister Satsuki Katayama held an online meeting with US Treasury Secretary Scott Bessent late on Monday amid growing concerns over sharp currency fluctuations.

According to Reuters sources, the discussions focused on proposed measures to address the yen's historic weakness, including the possibility of intervention in the foreign exchange market.

Katayama reiterated on Monday that government authorities are fully prepared to take decisive action and intervene directly in the currency market at any time to protect the yen from speculative movements.

Views and analysis

Matt Simpson, Senior Market Analyst at StoneX, said: "Japan's Ministry of Finance may be concerned about the US dollar rising against the yen to its highest level of 2024."

He added: "The ministry may also feel unable to do much about it, as intervening against a hawkish Federal Reserve and strong US economic data could prove costly and ineffective."

Japanese interest rates

Economic surveys indicate that the most likely baseline scenario is for the Bank of Japan to deliver an additional 25-basis-point interest rate increase in December.

Market pricing for a quarter-point rate hike at the Bank of Japan's July meeting currently remains below 25%.

Investors are awaiting additional data on inflation, unemployment, and wage growth in Japan to reassess those expectations.