- The Japanese government intervened in foreign-exchange markets to buy yen and sell dollars on Thursday, while U.S. authorities executed a rate check, a move often seen as a precursor to intervention.
- Actions help push Japanese currency into 157 range against dollar at one point.
- Japan conducted yen-buying, dollar-selling intervention in New York on Thursday, its first such foray in three months, as the currency's slump to four-decade lows threatened to worsen living costs.
- U.S. Treasury Secretary Scott Bessent stated that Japan may have intervened to prop up its yen currency, noting that the yen 'seems very undervalued to me.'
- The Nikkei newspaper reported that Japan likely conducted massive yen-buying intervention.
- Japan intervened in foreign exchange markets with a record 11.7 trillion yen ($73 billion) between late April and early May.
- Finance Minister Satsuki Katayama's repeated threats of 'decisive' action have kept markets on edge but failed to give a sustained boost to the sagging currency.
- While Washington appears to endorse Tokyo's efforts to combat a weak yen, it has also signalled the need for the BOJ to push through further rate hikes.
- The Treasury called for further BOJ rate hikes, warning that inflation has strained households' purchasing power even as nominal wages rose notably.
Japan's recent intervention in foreign-exchange markets aimed to stabilize the yen, which had fallen to a four-decade low against the dollar. The government executed a yen-buying, dollar-selling operation in New York, marking its first intervention in three months.
The yen reached the 157 range against the dollar during this intervention, as U.S. Treasury Secretary Scott Bessent noted that the yen 'seems very undervalued to me.' This coordinated effort between the U.S. and Japan comes amid rising living costs driven by soaring energy prices, exacerbated by the ongoing Iran war.49
Japan's Finance Minister Satsuki Katayama has repeatedly warned of 'decisive' action to combat the yen's weakness, which has strained households' purchasing power. Despite these warnings, previous interventions have failed to provide a sustained boost to the currency.7
In a significant move, Japan intervened with a record 11.7 trillion yen ($73 billion) between late April and early May, highlighting the urgency of the situation. While Washington supports Tokyo's efforts, it has also called for the Bank of Japan to implement further rate hikes to address inflationary pressures.6
As the situation develops, markets remain on high alert for further interventions, reflecting the delicate balance between currency stability and economic growth.
“Japan's recent yen-buying intervention is its first in three months, as the currency's decline threatens living costs amid rising inflation. U.S. Treasury Secretary Scott Bessent noted the yen 'seems very undervalued,' indicating potential collaboration between the U.S. and Japan to stabilize the currency.”
