TOKYO - Japan’s finance minister called recent yen weakness "speculative" as Middle East conflict drives market volatility. With the yen near 160 per dollar, policymakers warn of inflation from oil spikes and currency depreciation.
Core inflation in Tokyo slowed in March, but import costs and energy prices are rising. Analysts expect further yen pressure if it breaks key thresholds.
Finance Minister Satsuki Katayama signaled readiness for broad intervention, citing disorderly moves in currency and oil markets.
The Bank of Japan faces a tight decision on rate hikes, with markets now pricing in a 70% chance of action by late April. A sustained slide below 162 could trigger major intervention, economists say.
Economy Minister Minoru Kiuchi added that bond market movements are also under close watch, as 10-year yields hit highs not seen since 1999.
Corporate cost-pass-throughs and persistent weakness in the yen suggest deeper inflation risks than seen during previous conflicts.