The yen is back under pressure, and this time the move is coming from Tokyo as much as from Wall Street. Japan’s new prime minister Sanae Takaichi has signalled she favours keeping borrowing costs low and raising rates only “step by step”, just as the currency slid to a record low beyond 179 per euro and hovered near nine-month lows around 155 per dollar.

What changed in Tokyo

Takaichi’s remarks reinforced the impression that neither the government nor the Bank of Japan is in a rush to slam the brakes on ultra-loose policy. Markets still see only a modest chance of a December rate hike, even though the yen’s slide has already pushed EUR/JPY to fresh all-time highs and kept USD/JPY pinned near levels where traders start whispering about intervention risk. The message investors heard was simple: support growth first, worry about the currency later.

That stance is colliding with a world where most other major central banks are already well into their easing cycles. Wide yield gaps mean Japanese investors are still rewarded for sending money abroad, while global funds have little incentive to park capital in yen assets unless there is a clear policy shift in sight.

For many macro funds, the yen has quietly turned back into the funding currency of choice.

Why FX desks care now

For currency traders, this is not just another weak-yen headline. Three themes are in play at the same time:

• Intervention watch: Every tick closer to 155 in USD/JPY and deeper into uncharted territory in EUR/JPY raises the odds of louder verbal warnings from Tokyo and, eventually, real action.
• Carry versus fear: As long as volatility stays contained, funding longs in higher-yielding currencies with short yen remains attractive — but any hint of coordinated BOJ/MOF pushback could force a painful position squeeze.
• Spillovers to risk assets: A disorderly yen move would not stay confined to FX; it tends to bleed into equities, credit and emerging-market currencies via rapid de-risking.

Near term, traders will watch three things: the tone of official comments from Tokyo, any change in BOJ guidance ahead of its next meeting, and how global risk appetite reacts if USD/JPY finally breaks decisively above 155. Until those signals turn, the path of least resistance still points to a weak yen and nervous hands on the intervention trigger.