Japanese Finance Minister Satsuki Katayama is set to announce on Monday that Tokyo and Washington have undertaken joint action in the currency market to counteract the yen's depreciation, which had reached 40-year lows. This marks the first joint intervention by the two nations since 2011, aimed at boosting the Japanese currency from its lowest levels against the dollar since 1986. Market sources indicate several rounds of yen-buying by Japanese and U.S. authorities. Katayama is expected to emphasize the commitment of both countries to address excessive yen declines, with one source confirming that the "operation is still ongoing."
The intervention occurred amid concerns over rising U.S. bond yields, which could be exacerbated if Tokyo failed to prevent a sell-off in the yen and Japanese government bonds. The U.S. Treasury, led by Secretary Scott Bessent, informed banks that it might intervene and advised them to be ready for future action. A Reuters photo from a Friday cabinet meeting showed Bessent's notepad with a "To Do" item: "Buy Japanese Yen (JPY) $5-10 bil." In a related move, the Japanese Ministry of Finance (MOF) posted on X, mentioning its "broad range of tools to address market liquidity needs," including access to the Fed's repurchase facility for temporary dollar liquidity, easing funding pressures for intervention without requiring sales of U.S. Treasuries.
The initial intervention from Tokyo happened hours before the Bank of Japan (BOJ) kept its monetary policy steady on Friday but signaled a potential rate hike soon. This decision followed a spike in the yen, suspected to be another round of yen-buying intervention. The coordinated efforts are seen as a response to the widening rate differential with the U.S., where the Federal Reserve has adopted a more hawkish stance, a key factor in the dollar's rise against the yen. Former BOJ official Nobuyasu Atago highlighted that both the U.S. and Japan are concerned about inflation and see merits in cooperation. By Friday's close in New York, the yen strengthened to 157.40 to the dollar, its strongest since early May, a significant rebound from near 1986 lows just days prior, a development also influenced by calls to banks and official statements by Bessent and Katayama. While the direct URL did not yield the exact article, information from other sources confirms the substance of the headline, particularly the readiness for further intervention.
