The yen trimmed its losses on Friday after reports emerged that the Bank of Japan had surveyed market participants on exchange rate levels, a move widely seen as a precursor to official intervention. Earlier in the session, the currency had tumbled sharply after the central bank delivered its widely expected rate hike but stopped short of offering clear guidance on further increases in borrowing costs, leaving traders who had sought more direction disappointed. Around 1:20 p.m. in New York, the yen was down 0.5% against the dollar at 156.70, having fallen as much as 1.3% earlier in the day.

According to a Nikkei report without citing sources, the BOJ conducted what traders refer to as a "rate check." This comes just weeks after US and Japanese authorities undertook a historic joint intervention to bolster the beleaguered yen. "Despite the BOJ's rate hike last night, the yen depreciated significantly, and today's rate check is yet another warning signal to the market," said Alex Cohen, a foreign exchange strategist at Bank of America. The Japanese Ministry of Finance "has already demonstrated its willingness to deploy substantial foreign reserves for intervention, which should raise market vigilance once again."

The yen slid to around 158 per dollar earlier on Friday after BOJ Governor Kazuo Ueda sent mixed signals regarding the path of future rate hikes. Ueda noted that the stage of monetary policy formulation has shifted, but simultaneously stated that pinpointing the terminal rate of this tightening cycle is challenging. Analysts suggested his remarks fell short of the increasingly hawkish expectations held by the market. The decision also faced dissent from board members Ichiro Atsumi and Aino Sato, adding further uncertainty about the pace and scale of future tightening.

The yen had rallied earlier this month, supported by expectations of accelerated BOJ tightening, unwinding of yen carry trades, and speculation that Japanese pension funds might shift more assets into domestic holdings. However, a hawkish move from the Federal Reserve has once again weighed on the yen. Strategists warn that if investors conclude the BOJ cannot keep pace with the Fed's tightening trajectory, the dollar-yen pair could push toward 160. "It's too little, too late," said Win Thin, chief economist at Bank of Nassau 1982. "The BOJ had another chance for a significant move, but they missed it, just like in July. If they truly want to boost the yen, they should have delivered a surprise-sized hike and then followed with massive intervention."

Japan has now entered a holiday period lasting through Wednesday, during which market liquidity is typically thin, potentially amplifying the impact of any official intervention. Authorities previously utilized a similar window around the Golden Week holidays in May, stepping into the market for the first time after the yen broke through 160 before the break, and subsequently appearing to intervene again during the quiet trading stretch.