The yen strengthened overnight, just as it was fast approaching a 40-year low, as Finance Minister Satsuki Katayama and U.S. Treasury Secretary Scott Bessent held a video conference.?

¡°We have a firm mutual agreement to act decisively whenever necessary,¡± Katayama said on Tuesday morning. ¡°That commitment remains unwavering.¡±??

At about 11 p.m. Monday in Tokyo, the yen rapidly appreciated, going in just over an hour from about ?161.9 to the dollar to about ?161.1, as media reported the meeting.?

The move was so jarring that some traders suspected that intervention might have been underway.

Katayama noted that the meeting was routine and not convened to address an emergency. Bessent attended the Group of Seven summit in France last week, and the conversation on Monday was simply a follow-up, she explained.?

On Tuesday, the currency was trading in the ?161.50-?161.60 range from the morning through early afternoon in Tokyo.

If it breaks ?161.95, last reached in July 2024, the yen would be its weakest against the dollar since December 1986. On Monday night, the yen traded briefly to ?161.93.

Katayama has repeatedly sent verbal warnings over the past week, but her language has been less threatening compared to the rhetoric deployed just ahead of Japan¡¯s $73 billion effort to prop up the currency in April.?

At that time, she said, ¡°The time to take the decisive action that I have been warning about is nearing.¡±

Some analysts said that the government might?be hesitant to make a move to support the yen, as intervention might not be effective given that there are virtually no other factors favoring the currency at this point.?

Dollar-buying pressure is strong, as expectations are growing that the U.S. Federal Reserve will increase rates.

If monetary policy shifts in the U.S., the interest rate gap between Japan and the U.S. is unlikely to narrow, although the Bank of Japan raised its policy interest rate to 1% last week.

Investors and analysts have been viewing ?160 to the dollar as the red line beyond which authorities will intervene. It has been trading above that level for a week and above ?161 for about three trading days.