Japanese Minister of Finance Satsuki Katayama could announce as early as today that Tokyo and Washington are coordinating in the foreign exchange market to curb the yen’s weakness, a person familiar with the situation said.
The content of the announcement is still being finalized but could happen as early as this morning, the person said, declining to be identified as the information is not released yet. Reuters reported Katayama would confirm the joint action and vouch for the two sides’ commitment to battle what he called excessive declines in the yen.
Japanese authorities bought yen and sold US dollars during New York trading on Friday, Bloomberg reported earlier, citing one person with knowledge of the matter. At the close of New York trading on Friday, the yen was quoted at ￥157.40 to the US dollar, the strongest since early May. Just two days earlier, it was floating around the weakest levels since 1986.
Photo: Bloomberg
The sharp gains were fueled by a combination of direct purchases of the yen, calls by officials to banks that trade the currency and appeals from US Secretary of the Treasury Scott Bessent and Katayama. Bessent signaled commitment to shoring up the yen when Reuters published a photograph of a notepad in front of him at a cabinet meeting in Camp David on Friday. Under a “To Do” title, it was written “Buy Japanese Yen (JPY) $5-10 bil.”
The operation on joint action is “still ongoing,” Reuters said, citing an unidentified government official.
The yen advanced more than 1 percent against the US dollar and the euro on Friday. It recorded an intraday jump of more than 3 percent versus the US dollar on Thursday, when Japan spent about ￥8.45 trillion (US$52.4 billion), according to Bloomberg and based on a comparison of Bank of Japan accounts and money brokers’ forecasts. That could be the biggest-ever intervention on a single day by Tokyo.
The Nikkei reported that the Japanese government and the Bank of Japan intervened to buy yen for a second straight day on Friday, while the Financial Times said separately that the US Federal Reserve Bank of New York sold euros to buy yen on behalf of the US Department of the Treasury. At least two major US banks were asked by the New York Fed to check the rate on the yen against the euro during the day, two people familiar with the matter told Bloomberg.
Separately, Japan’s Growth Strategy Minister Minoru Kiuchi said on Sunday Japan would step up two-way dialogue with markets this month to bolster investor confidence in its growth strategy.
“From this month onward, we intend to strengthen two-way communications with the markets,” Kiuchi said in a program on national broadcaster NHK, adding that losing confidence would push up interest rates. The government would explain its policies “consistently and transparently” to address market concerns, while responding appropriately to changing conditions, Kiuchi said.
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