Japan’s top economic officials signalled heightened vigilance over financial markets on Wednesday, with Finance Minister Satsuki Katayama saying she and Bank of Japan Governor Kazuo Ueda agreed to watch developments with a “strong sense of urgency.”

We’re about to get more active in Asia morning trade, so just reviewing that meeting yesterday.

The comments came as the yen weakened past 156 per dollar, pressured by expectations that Prime Minister Sanae Takaichi’s new administration will deliver a large stimulus package funded by an extra budget. Kyodo reported the package could exceed ¥20 trillion, with around ¥17 trillion in new spending. As you all can see, the yean is even weaker now, circa 157.

Katayama said she had “no objection” to Ueda’s explanation that the BOJ is gradually withdrawing monetary support through rate hikes. She added that the government and BOJ reaffirmed their commitment to achieving stable inflation and rising wages, while maintaining close communication.

The meeting followed Ueda’s discussions with Takaichi a day earlier, where the BOJ chief outlined the bank’s policy stance and currency concerns. Takaichi’s preference for aggressive fiscal and monetary support complicates the BOJ’s gradual tightening path, though Ueda said the prime minister made no policy requests and appeared to support measured rate increases.

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I’ve seen plenty of warnings of intervention to come. I mentioned last week I expect it over Thanksgiving when markets are less liquid. Japan’s Ministry of Finance and Bank of Japan are very well aware that in trying to strengthen the yen the fundamentals are against them. They’ll need a thin market for intervention to have any impact. Even then It’ll be fleeting.