Japan conducted yen-buying, dollar-selling intervention in New York on Thursday, a market source said, its first such foray in three months, as the currency’s slump to four-decade lows threatened to worsen living costs hit by the Iran war-driven energy shock.
The move came ahead of the Bank of Japan’s policy decision on Friday, where the central bank is widely expected to keep interest rates steady at 1 per cent but signal its readiness to continue pushing up borrowing costs.Japan’s top currency diplomat Atsushi Mimura on Friday declined to comment on intervention but hinted at U.S. involvement in the effort to stem the yen’s decline, including so-called rate checks by the Federal Reserve.
“We are receiving support from the United States that goes beyond psychological support, and I’m constantly in contact with relevant authorities,” Mimura told reporters when asked about the possibility of coordinated intervention with the United States.Asked whether that would include rate checks, considered precursors for currency intervention, he said the support “would include that as well”.
U.S. Treasury Secretary Scott Bessent said on Thursday that Japan may have intervened to prop up its yen currency, according to a Fox Business Network reporter, who added Bessent said the yen “seems very undervalued to me.”
The Nikkei newspaper reported earlier on Friday that Japan likely conducted massive yen-buying intervention. It also reported that U.S. authorities conducted rate checks. The New York Federal Reserve also declined to comment.
Finance Minister Satsuki Katayama declined to comment, when asked by reporters at the finance ministry on Friday morning about whether Tokyo intervened. “We are always ready to respond with a sense of urgency,” she said about exchange-rate moves.The dollar sank to a more than two-month low against the Japanese yen on Thursday in what analysts said looked like official intervention. After hitting 159.22 per dollar on Thursday, the yen resumed its decline in Asia and stood at 160.07 on Friday.
“The timing was faster than expected as I saw a good chance of intervention after the BOJ’s policy meeting on July 30-31,” said Toru Suehiro, chief economist at Daiwa Securities.
“If the U.S., as reported, has conducted rate checks and may be endorsing a weak dollar, that’s positive for the Takaichi administration,” he said.
Markets have been on alert for yen-buying by Japanese authorities, who have warned of action for months as the currency’s weakness exacerbates the cost-of-living impact of rocketing energy import prices.
In a rare coordinated move, South Korea also conducted dollar-selling intervention on Thursday, sending the won to a nine-month high, a market source told Reuters.
Reuters
