The yen pared declines on Friday after the Nikkei newspaper reported that the Bank of Japan had conducted a rate check in the foreign-exchange market. The report helped stem some of the yen’s losses triggered earlier in the session by disappointment among traders who had wanted clearer guidance from the central bank on its plans to raise borrowing costs further to stabilize inflation, following a widely expected rate increase on Friday. The Japanese currency was down 0.6% at 156.83 per dollar at about 12:30 p.m. in New York, after losing as much as 1.3% earlier in the session. The Nikkei reported that the BOJ inquired with market participants about exchange-rate levels, without saying where it got the information. Such a move has previously preceded official intervention.

“This is too little, too late,” said Win Thin, chief economist at Bank of Nassau 1982. “The BOJ had another chance to go big and they missed it, same as July. If they really wanted to boost the yen, they should have hiked more than expected and then intervene massively.” The yen had weakened to about 158 per dollar after BOJ Governor Kazuo Ueda sent mixed signals on the path for future rate hikes following the bank’s widely expected increase. While he said the stage for policy setting has shifted, he also said it was difficult to determine the terminal rate for the current tightening cycle. Analysts saw his remarks as falling short of the market’s increasingly hawkish expectations. The decision also drew dissents from board members Toichiro Asada and Ayano Sato, adding to uncertainty over the pace and extent of further tightening.

The yen had rallied earlier this month, fueled by expectations of faster BOJ tightening, an unwind of yen-funded carry trades and speculation that Japanese pension funds could shift more money to domestic assets. But the Federal Reserve’s hawkish hike has renewed pressure on the currency, with strategists warning dollar-yen could climb toward 160 if investors conclude the BOJ will struggle to keep pace with the Fed’s tightening. Japan has entered a holiday period through next Wednesday, when thinner liquidity could amplify the impact of any official intervention. Authorities used a similar window around the Golden Week holiday period this year, first stepping in after the yen weakened beyond 160 just before the holidays and then apparently intervening again during the thinly traded period.

Japan and the US conducted a coordinated yen-buying operation this summer, the first since 1998, raising the stakes for traders betting against the yen. Japan spent a record ¥15.4 trillion on intervention in the month through Aug. 26, according to Finance Ministry data. US Treasury Secretary Scott Bessent has since continued to signal support for a stronger yen. Still, some of the fundamental pressures weighing on the yen remain in place, including Japan’s wide interest-rate gap with other major economies and concerns over the fiscal outlook under Prime Minister Sanae Takaichi’s expansionary spending plans. Intervention can squeeze speculative yen shorts and accelerate a move in thin markets, but its ability to produce a lasting reversal may depend on monetary policy. The Fed’s renewed tightening cycle threatens to keep the US-Japan rate differential wide even after Friday’s BOJ rate increase, preserving the incentive for investors to borrow in yen to fund higher-yielding positions elsewhere. Speculative positioning is also lighter than before the previous intervention. Leveraged funds halved their bearish yen bets in the week through Sept. 8, according to CFTC data, potentially leaving fewer short positions to squeeze if authorities step in again.