On the afternoon of April 30, Japan's financial markets faced three major shocks simultaneously: long-term interest rates surged above 2.5% for the first time in 27 years, the dollar briefly pushed the yen below the 160-mark, and Finance Minister Satsuki Katayama issued an urgent warning, signaling that decisive action was near. Within the same trading session, Japan's authorities made an official statement to address both the record-breaking bond yield and a looming currency crisis.
"Keep Your Phones On — Even Overnight," Finance Minister Warns
At a Ministry of Finance briefing, Minister Katayama emphasized, "The time for decisive measures is approaching." She added pointedly, "Please do not put down your phones — not when you go out, not when you sleep." This remark sent a clear message: currency intervention could occur at any moment.
This is not the first time Japan has intervened in the currency markets. The last major intervention occurred in July 2024, when the government and the Bank of Japan (BOJ) conducted yen-buying operations worth more than 5.5 trillion yen on July 11–12.
Bond Yields Soar: A First in Nearly Three Decades
In the bond market, newly issued 10-year Japanese government bonds saw their yield exceed 2.5%, touching 2.535% — the highest level in over 27 years. Analysts believe this surge was driven primarily by rising oil prices, fueled by tensions in the Strait of Hormuz. During the trading session, WTI crude oil futures in New York briefly surpassed $110 per barrel.
The yen's weakening is the result of multiple converging factors: capital flight to the dollar prompted by Middle East instability, inflationary pressures from rising energy costs, growing market expectations of an upcoming BOJ rate hike, and concerns about Japan's expanding trade deficit.
Katayama's Pledge: "Every Effort Will Be Made"
Two days before the market turbulence, Finance Minister Katayama appeared on a live broadcast with Shizuoka Asahi Television to address the Takaichi administration's pledge to introduce a two-year zero tax rate on food consumption. She stated that this initiative was a key part of the coalition agreement between the Liberal Democratic Party and Nippon Ishin no Kai. Katayama vowed to "make every possible effort" to fulfill this promise, while acknowledging that the Prime Minister might adjust the policy in response to evolving economic conditions.
BOJ Holds Rates: No Disagreement Between Katayama and Governor
Regarding the Bank of Japan's recent decision to hold interest rates steady, Katayama noted that during the G7 Finance Ministers and Central Bank Governors meeting, there was broad consensus that risks to economic activity from the situation in Iran and other global factors remained difficult to assess. She also pointed out that the BOJ's stance was aligned with her own, stating, "There is no divergence in judgment between myself and the BOJ Governor."
Katayama also outlined the administration's policy of "responsible proactive fiscal management," explaining that it involves the government absorbing risks the private sector cannot manage alone — through subsidies or subordinated loans — to attract private capital. She cited Japan's semiconductor support policies as a prime example, stressing that "without public-private cooperation, these ventures could not operate." （Related： BOJ Holds Rates, But a 6-3 Split Puts June Hike Firmly in Play ｜ Latest ）
