Yen Jumps to 156 as Minister Signals 'Free Hand' for Intervention

The Japanese yen strengthened sharply against the dollar on Monday, touching the upper 156-range during New York trading hours. The rally ignited after Finance Minister Satsuki Katayama signaled Tokyo is prepared to act against the currency's slide, telling Bloomberg that Japan has a "free hand" to intervene in the foreign exchange market.

Katayama's remarks represent one of the strongest warnings yet from Japanese officials aimed at curbing the yen's depreciation. She emphasized that the currency's recent moves were "not based on fundamentals," directly challenging the market's bearish trajectory.

Traders immediately interpreted the "free hand" comment as a clear and credible threat of direct market intervention. While verbal warnings are a common tool for finance ministries, the explicit nature of the statement was enough to trigger a significant short squeeze, pushing the yen away from the psychologically important 160-per-dollar level often viewed as a red line for authorities.

This puts the market on high alert. While Japan hasn't yet deployed its reserves to buy yen, the minister's rhetoric significantly raises the risk for anyone betting against the currency. The move comes as the Bank of Japan faces mounting pressure to tighten monetary policy to provide more fundamental support for the yen.