The yen slid to weakest level in about 34 years against the dollar, fanning speculation that Japan will step up its effort to slow the decline.

The currency declined 0.3% to 151.97 per dollar in Tokyo, passing the 151.95 level set in October 2022. Japan’s top currency official this week delivered his most robust salvo of warnings in months against speculative moves in the foreign-exchange market.

“The current weakening of the yen is not in line with fundamentals and is clearly driven by speculation,” Masato Kanda, vice finance minister for international affairs, told reporters on Monday. “We will take appropriate action against excessive fluctuations, without ruling out any options.”

A Trader’s Guide to Japanese Policymakers’ Language on the Yen

Investors expect the interest-rate differentials between Japan and other developed economies, notably the US, to remain wide even after the Bank of Japan ended the world’s last negative interest-rate regime. That’s undermining the yen as investors favor higher-yielding currencies elsewhere.

Governor Kazuo Ueda has stressed that accommodative policy will stay in place for now, which has brought the focus back to the yawning gap between policy rates in Japan and the US. After the BOJ’s landmark decision on March 19, 62% of 47 polled analysts expect the central bank to increase rates again by October, but their opinions diverge on the specific timing of any move.

Japan spent over ¥9 trillion ($59.3 billion) during three forays into the market in 2022 to bolster the yen in September and October. The first intervention came when the yen was much stronger than the current level.

  - Bloomberg