(July 31): Japan’s authorities refrained from confirming that they intervened in the foreign-exchange (FX) market during overnight trading after the yen’s sharp rally, while also hinting at some support from overseas counterparts including US officials.
Finance Minister Satsuki Katayama on Friday sidestepped a question on whether the yen’s surge was the result of intervention, saying only that authorities would “remain on high alert and respond as appropriate.”
Speaking shortly afterward, top currency official Atsushi Mimura hinted that authorities have been receiving support from their US counterparts and other countries.
“I do recognise that we’ve received support from the US that goes beyond simply moral support,” Mimura said. “Through my own channels, we’re in constant contact with the US authorities,” he added, declining to elaborate.
They spoke after the yen strengthened as much as 3.3% against the dollar in New York trading on Thursday, its biggest intraday gain since December 2023. A market participant familiar with the matter said Japan intervened to support the currency, adding that US authorities conducted a rate check at around 2.30am Tokyo time.
The suspected intervention came hours before the Bank of Japan’s (BOJ) board is widely expected to keep its benchmark interest rate unchanged. On several previous occasions, Japanese authorities have intervened in the currency market in the hours after BOJ policy announcements.
There is also speculation that Japan and South Korea coordinated their market operations, with Seoul also selling dollars during New York hours, Reuters reported.
The won strengthened overnight to 1,417.10 versus the dollar, the strongest level since mid-October.
“I’ve never said I’m only in contact with the US authorities,” Mimura said.
Japan and South Korea have previously signalled close coordination on currency matters. In a joint statement issued in March, their finance ministers expressed serious concern over the rapid depreciation of the yen and the won, and reaffirmed that they would closely monitor FX markets and take appropriate action against excessive volatility and disorderly moves.
The apparent involvement of other countries, particularly the US, adds heft to the intervention and is likely to make traders more cautious. US Treasury Secretary Scott Bessent said in an interview with Fox Business that he considers the yen “very undervalued” and that “excess volatility” is unhealthy.
The suspected intervention would be the first since Japan’s Golden Week holiday period that started in late April, when authorities spent a record ¥11.73 trillion (RM296.42 billion) to prop up the currency over the course of several days.
The approach this time was markedly different. Ahead of the intervention in late April, Japanese officials sent a clear warning that they were prepared to act. Over the past month, by contrast, Mimura in particular has kept a notably lower profile. Aside from a Bloomberg interview, he has made few public remarks and appeared restrained.
In that interview, Mimura stopped short of repeating the ministry’s standard language warning of intervention. His reticence suggested authorities might be willing to let the currency fall further before acting, while it could also be seen as an attempt to retain a degree of surprise in the event authorities opted to step into the market.
The Finance Ministry is expected to release quarterly intervention data next week that will detail a daily breakdown of any operations conducted between April and June.
“There’s really nothing more to it than that we’ll take appropriate action whenever necessary,” Mimura said on Friday when asked about the impact of the yen’s historic weakness on Japan’s economy.
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