Japanese Finance Minister Satsuki Katayama will announce on Monday that Tokyo and Washington took joint action in the currency market to arrest the yen’s slide to 40-year lows, two Japanese government officials told Reuters.
Katayama is likely to stress the two countries’ determination to combat what they consider excessive yen declines, said the sources familiar with the matter, on condition of anonymity due to the sensitivity of the issue.
One source, asked if Katayama would announce “joint action”, said yes, adding, “The operation is still ongoing.”
The Ministry of Finance could not immediately be reached for comment on Sunday. U.S. Treasury Department officials did not immediately respond to requests for comment.
FIRST JOINT YEN INTERVENTION IN 15 YEARS
The expected announcement follows what market sources say were rounds of yen-buying in the market by the Japanese and U.S. authorities, the first joint intervention since 2011, seeking to boost the Japanese currency from its lowest levels against the dollar since 1986.
The Japanese government bought yen for dollars in New York trading hours on Thursday, a market source told Reuters, with Bank of Japan data suggesting it sold as much as $58.97 billion to support the yen.
Tokyo’s initial intervention came hours before the BOJ decided on Friday to keep monetary policy steady while signalling a strong chance it would raise interest rates soon. A widening rate differential with the U.S., where the Federal Reserve has dramatically shifted to a more hawkish stance, has been a key factor in the dollar’s rise against the yen.
Shortly after BOJ Governor Kazuo Ueda held a press conference on the central bank’s decision, the yen spiked in what markets suspect may have been another bout of yen-buying intervention by Tokyo.
“Going forward, as the official responsible for currency policy, I would like to respond in close coordination with monetary policy,” Katayama’s top currency diplomat, Atsushi Mimura, told reporters after the yen’s spike on Friday, suggesting the MOF and BOJ were working hand in hand to combat the weak yen.
Also on Friday, the U.S. Treasury informed a number of banks that it might intervene in the yen market and that they should “stand ready for future action”, a source familiar with the matter told Reuters.
Treasury Secretary Scott Bessent, who said last week the yen “seems very undervalued to me”, had a notepad at a Friday cabinet meeting with the words “To Do”, followed by “Buy Japanese Yen (JPY) $5-10 bil”, a Reuters photo showed.
CONCERN OVER RISING U.S. BOND YIELDS
In another sign of bilateral coordination, the MOF made a rare post in English on X that it had “a broad range of tools to address market liquidity needs”, including access to the Fed’s repurchase facility providing temporary dollar liquidity.
The Fed facility, introduced in 2020 to steady markets during the COVID-19 pandemic, allows Japan to raise dollar liquidity without outright sales of U.S. Treasuries, potentially easing funding pressures on Tokyo for intervention.
