On Friday, Japan increased its warnings against currency speculation. Previously, the Governor of the Bank of Japan hinted that he might wait longer than expected to raise interest rates, causing the yen's exchange rate to drop to its lowest level in five months.

Finance Minister Kato Katsunobu said on Friday, "The Japanese government is deeply concerned about recent currency trends, including movements driven by speculators. We will take appropriate actions if the currency market experiences excessive volatility."

After Kato's remarks, the yen regained some ground against the dollar, rising back to 156.89 after briefly dropping to 157.93 earlier. The appointment of Mimura Jun by the Japanese Ministry of Finance also echoed Kato's supportive statements, further strengthening the yen.

Mimura told reporters, "We are deeply concerned about recent Forex trends. At this point, I think it is best not to say too much; we will take appropriate countermeasures against any excessive actions."

At the same time as the senior officials in Japan made these remarks, the recent large fluctuations in the yen have raised concerns that the Japanese government may intervene in the currency market to support its own currency.

In July, the yen's exchange rate against the dollar fell to 160, partly due to speculators taking advantage of the significant interest rate gap between Japan and the USA. Since then, the Japanese government has not intervened in the market. So far this year, Japanese authorities have spent nearly 100 billion USD to support the yen.

As the holidays approach, market liquidity will decline, increasing the likelihood of sudden currency fluctuations. Low liquidity also presents a potential opportunity for Japan's policymakers, as their market interventions could have a relatively significant impact on currency levels.

After the President of the Bank of Japan, Ueda Kazuo, suggested that there may be a longer wait before the next rate hike, the yen fell sharply on Thursday. The Bank of Japan maintained interest rates at its meeting on Thursday, in line with the expectations of more than half of the economists surveyed by Bloomberg. Most respondents expect the Bank of Japan's next rate hike to be in January next year. Jun Mimura declined to comment on the Bank of Japan's recent communications, stating that the independence of the central bank should be respected.

The overnight revisions to the USA's GDP data and the Federal Reserve's preferred inflation indicator further put pressure on the yen, as this reinforced the market's view that the Federal Reserve may slow down its easing measures further. Previously, the Federal Reserve reduced the expected number of interest rate cuts in 2025.