Japan’s finance minister, Satsuki Katayama, has signalled that the government is prepared to step into the foreign-exchange market as the yen edges towards its weakest level in nearly ten months, Kyodo News reports. The currency’s steady decline against the US dollar has intensified scrutiny of the country’s fiscal direction under Prime Minister Sanae Takaichi.

The yen has been under sustained pressure as investors assess the likelihood of increased bond issuance to fund Takaichi’s growth-focused agenda. Concerns over Japan’s already fragile public finances—the most indebted among the G7—have encouraged traders to reduce exposure to the currency, accelerating its slide.

According to Kyodo, Japan last intervened in the foreign-exchange market in mid-2024, and the prospect of renewed action has become a focal point for market participants. A weaker yen continues to support exporters by enhancing the value of overseas earnings, yet it simultaneously lifts import costs in an economy reliant on foreign energy and food supplies.

Attention is also centred on the Bank of Japan, which faces questions over whether further tightening may be required to offset the inflationary effects of the depreciating currency. Consumer prices have been rising faster than wages, deepening pressure on household budgets and fuelling expectations that policymakers may seek to stabilise the yen.

Kazuo Ueda, the central bank governor, has acknowledged that recent currency movements are filtering into consumer prices, adding to debate over the BOJ’s next steps. The current trajectory recalls the prolonged depreciation that accompanied the policy mix of aggressive monetary easing and fiscal expansion under Shinzo Abe. Takaichi, viewed by many lawmakers as continuing Abe’s fiscal approach, now confronts a similar test as markets weigh the sustainability of her economic strategy.