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Japan’s yen yesterday crashed to an 11-month low against the US dollar, triggering a direct warning from Finance Minister Satsuki Katayama that Japan would “take bold action” soon. There’s no set price number that would trigger action, and Japan’s officials won’t commit to an exact rate. The yen’s weakness began right after the Bank of Japan lifted interest rates in December to their highest level in 30 years. That hike was expected, but what surprised traders was how cautious Governor Kazuo Ueda sounded afterward. They had expected tougher language on future rate increases. When that didn’t happen, the yen sold off hard. Many now think the BOJ won’t raise rates again anytime soon. Japan’s weak currency could trigger inflation and ruin Sanaenomics This isn’t the first time the yen has fallen, but the damage is different now. For years, a cheaper yen helped exporters and attracted tourists. It made Japan a low-cost destination and boosted big companies’ earnings. But in 2025, the downside is too big to ignore. The country imports most of its energy and raw materials, so a weaker yen means higher costs at home. Inflation has hit household budgets, and domestic businesses are struggling. Some of them can’t pass on rising costs to customers. That pressure helped topple two prime ministers before Sanae Takaichi took office. She’s now the one stuck managing the fallout. There’s also heat from Washington. President Donald Trump accused Japan in March of letting its currency drop to win trade advantages. He said tariffs were on the table if it continued. Trump’s criticism echoed earlier trade fights. Though Japan is on the US Treasury Department’s monitoring list, it hasn’t been branded a currency manipulator. Still, the warning shot was loud. How Japan intervenes and what happens next if it does When Japan decides…

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Filed under: News - @ December 23, 2025 2:23 pm