TOKYO: Japanese Finance Minister Satsuki Katayama will announce today that Tokyo and Washington have taken joint action in the currency market to arrest the yen\u2019s slide to 40-year lows, two Japanese government officials tell Reuters.<\/p>\n
Katayama is likely to stress the two countries\u2019 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.<\/p>\n
One source, asked if Katayama would announce \u201cjoint action\u201d, said yes, adding, \u201cThe operation is still ongoing.\u201d<\/p>\n
The Finance Ministry (MoF) and the US Treasury Department officials did not immediately respond to requests for comment.<\/p>\n
The expected announcement follows what market sources said were rounds of yen-buying in the market by the Japanese and US authorities, the first joint intervention since 2011, seeking to boost the Japanese currency from its lowest levels against the dollar since 1986.<\/p>\n
The Japanese government bought yen for dollars in New York trading hours last Thursday, a market source told Reuters, with Bank of Japan (BoJ) data suggesting it sold as much as US$58.97bil to support the yen.<\/p>\n
Tokyo\u2019s initial intervention came hours before the BoJ decided last Friday to keep monetary policy steady, while signalling a strong chance it would raise interest rates soon. A widening rate differential with the United States, where the Federal Reserve (Fed) has dramatically shifted to a more hawkish stance, has been a key factor in the dollar\u2019s rise against the yen.<\/p>\n
Shortly after BoJ governor Kazuo Ueda held a press conference on the central bank\u2019s decision, the yen spiked in what markets suspect may have been another bout of yen-buying intervention by Tokyo.<\/p>\n
\u201cGoing forward, as the official responsible for currency policy, I would like to respond in close coordination with monetary policy,\u201d Katayama\u2019s top currency diplomat, Atsushi Mimura, told reporters after the yen\u2019s spike last Friday, suggesting the MoF and BoJ were working hand in hand to combat the weak yen.<\/p>\n
That same day, the US Treasury informed a number of banks that it might intervene in the yen market and that they should \u201cstand ready for future action\u201d, a source familiar with the matter told Reuters.<\/p>\n
Treasury Secretary Scott Bessent said last week the yen \u201cseems very undervalued to \u200bme\u201d. In another sign of bilateral coordination, the MoF made a rare post in English on X that it had \u201ca broad range of tools to address market liquidity needs\u201d, including access to the Fed\u2019s repurchase facility providing temporary dollar liquidity.<\/p>\n
The Fed facility, introduced in 2020 to steady markets during the Covid-19 pandemic, allows Japan to raise dollar liquidity without outright sales of US Treasuries, potentially easing funding pressures on Tokyo for intervention.<\/p>\n
Critics have said Japan could face constraints to continued yen-buying intervention, as selling down its huge Treasury holdings to fund such action could trigger a selloff in US debt and cause an unwelcome spike in US yields.<\/p>\n
Some analysts saw the signs of Japan-US cooperation as driven by Washington\u2019s concern over rising Treasury yields, which could worsen if Tokyo failed to prevent a selloff in the yen and Japanese government bonds (JGBs).<\/p>\n
\u201cBoth the United States and Japan face risks of inflation turning hot and leaving their central banks behind the curve,\u201d former BoJ official Nobuyasu Atago told Reuters. \u201cThey see merits in cooperating.\u201d<\/p>\n
Highlighting Japan\u2019s concern over rising JGB yields, Economy Minister Minoru Kiuchi said yesterday the government will step up efforts to enhance communication with markets. \u201cIt\u2019s very important to maintain market trust in Japan\u2019s fiscal sustainability.\u201d \u2014 Reuters<\/p>\n","protected":false},"excerpt":{"rendered":"TOKYO: Japanese Finance Minister Satsuki Katayama will announce today that Tokyo and Washington have taken joint action in…\n","protected":false},"author":2,"featured_media":68093,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[174],"tags":[1105,4254,191,189,3074,11921,8,188,190,1203],"class_list":["post-68092","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-currency","tag-dollar","tag-economy","tag-economy-of-japan","tag-forex","tag-intervention","tag-japan","tag-japans-economy","tag-japanese-economy","tag-yen"],"_links":{"self":[{"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/posts\/68092","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/comments?post=68092"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/posts\/68092\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/media\/68093"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/media?parent=68092"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/categories?post=68092"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/tags?post=68092"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}