Japan's Vice Finance Minister for International Affairs Masato Katayama signaled Tuesday that authorities may intervene in currency markets as the yen approaches the psychologically significant 160 per dollar level.

The Japanese currency has been under sustained pressure in recent months as the Bank of Japan maintains ultra-low interest rates while other major central banks have raised borrowing costs to combat inflation. The yen's weakness has raised concerns about imported inflation and its impact on Japanese consumers.

Katayama's comments represent the most direct warning yet from Japanese officials about potential market intervention. Japan last intervened in currency markets in 2022 when the yen weakened beyond 150 per dollar, spending an estimated 9.2 trillion yen to support the currency.

The 160 level is viewed by market participants as a critical threshold that could trigger coordinated intervention by Japanese monetary authorities. Currency intervention involves central banks buying or selling their currency in foreign exchange markets to influence its value.

The yen's decline has been driven by the wide interest rate differential between Japan and other major economies, particularly the United States, where the Federal Reserve has maintained higher rates to control inflation. This gap makes dollar-denominated assets more attractive to investors, putting downward pressure on the yen.