On Monday, Japan's Finance Minister Satsuki Katayama announced that Tokyo and Washington had taken joint action in the currency market to address the yen's slide to near 40-year lows. This marks the first time since 2011 that the two countries have intervened together to influence the currency market. Katayama is expected to emphasize the determination of both nations to combat what they deem as excessive yen declines, according to anonymous sources familiar with the matter.
The U.S. Treasury actively intervened on Friday to support the yen through outright purchases, joining Japan's efforts to strengthen the currency. The Financial Times reported that the Federal Reserve Bank of New York conducted a sale of euros to buy yen on behalf of the Treasury, utilizing Goldman Sachs and Morgan Stanley. This intervention helped push the yen higher against the dollar, with the yen closing at 157.40 to the dollar on Friday, its strongest level since early May. Just two days prior, it was hovering near its weakest levels since 1986.
Japanese central bank data on Friday indicated that Japan may have sold as much as $58.97 billion to buy yen on Thursday, signaling repeated efforts to stem the currency's weakness. The sharp gains in the yen were attributed to direct purchases, calls from officials to currency-trading banks, and strong statements from U.S. Treasury Secretary Scott Bessent and Japanese Finance Minister Satsuki Katayama. Bessent, drawing on his hedge fund background, indicated his belief that the yen was excessively weak. Former U.S. President Trump also commented that Japan had sought a "little bit of help" from the U.S. regarding the yen.
Currency traders are now on high alert for further joint intervention by Japan and the U.S. as trading commences in Asia on Monday, following the coordinated operations last week that led to a significant rebound in the yen.
