The Bank of Japan decision imminent, finance minister warns: entering "24/7" foreign exchange market monitoring state.

Just hours before the Bank of Japan announced its policy decision, the Finance Minister issued a warning to speculators that the Japanese authorities were prepared to respond to fluctuations in the foreign exchange market at any time. "I have always emphasized the need for decisive action when necessary," Finance Minister Taniyama Kaizuki told reporters on Tuesday. "We are prepared to respond around the clock," she added when asked if the government would remain vigilant as Japan prepares to enter the Golden Week holiday. As Taniyama Kaizuki spoke, the Bank of Japan was set to announce its latest interest rate decision in a few hours, with the market generally expecting the authorities to maintain their current policy. The focus will be on the voting results of the policy committee, as economists weigh the possibility of a rate hike in June. Governor Ueda Kazuo's remarks at the press conference after the decision will be closely scrutinized. According to pricing from overnight swap markets, traders see less than a 3% chance of a rate hike on Tuesday, with the likelihood of a rate hike in the June meeting increasing to 65%. On Tuesday morning, the yen against the dollar in the Tokyo market was around 159.43, close to the level where interventions were made in 2024 to support the yen. "I think it's best to wait for his judgment," Taniyama Kaizuki said, referring to Governor Ueda Kazuo's press conference, which usually starts at 3:30 pm Tokyo time. Taniyama Kaizuki said that the volatility in crude oil futures remains high, which is believed to be fueling speculative behavior in the foreign exchange market, citing market views. The Japanese authorities are increasingly concerned about the developments in the crude oil futures market, indicating that they are monitoring a broader market beyond currency. Taniyama Kaizuki also stated that the US and Japan will continue to work more closely on currency-related issues and take action when necessary. She referred to the US-Japan currency agreement reached last September and the bilateral meeting she held earlier this month with US Treasury Secretary Scott Benson. In terms of policy coordination, the Japanese authorities are seeking to stay highly synchronized with international allies to enhance the legitimacy and effectiveness of interventions. It is understood that Taniyama Kaizuki has been in closer communication with US Treasury Secretary Benson recently than ever before. She said that the US and Japan will continue to work more closely on currency-related issues and take action when necessary. Market analysts generally believe that the Japanese government has reached some degree of understanding with the US on exchange rate issues, paving the way for Japan to conduct large-scale unilateral or coordinated interventions when necessary. Meanwhile, Japan is about to enter the "Golden Week" long holiday period, where scarce market liquidity often exacerbates price fluctuations. Issuing a warning to be "on standby at all times" at this time reflects the authorities' strategic intent to prevent speculators from taking advantage of the holiday window for reverse harvesting. However, whether verbal interventions alone can reverse the yen's decline largely depends on the subsequent policy direction announced by the Bank of Japan. Despite the strong intervention willingness shown by the Ministry of Finance, the market is still focused on whether Bank of Japan Governor Ueda Kazuo will effectively narrow the interest rate differential between Japan and the US through a more "hawkish" rate hike path or reducing bond purchases. This delicate balance of "government warnings, central bank watching" makes today's Bank of Japan rate meeting the absolute center of attention in the global currency market. If the Bank of Japan's policy measures are below expectations, even if the Ministry of Finance implements intervention measures, the yen may face a more complex game.