The Federal Reserve said on Wednesday that the US participation with Japan in intervening to support the Japanese yen in late July was a Treasury Department move, and that its own funds weren’t involved. The Federal Reserve Bank of New York, “acting purely as fiscal agent for the US Treasury,” intervened using Treasury funds, minutes of the Federal Open Market Committee’s September meeting showed. The Fed’s so-called System Open Market Account portfolio, which contains the central bank’s holdings of US government debt and other securities, wasn’t involved, the minutes showed. The minutes didn’t reveal the exact timing or volume of the operations.
Treasury Secretary Scott Bessent last month said the US only deployed a “nominal” amount in the operation, and said it was in American interests. The yen’s weakness has become a growing issue for Japanese policymakers, given its role in driving up import prices and household living costs. President Donald Trump, meanwhile, has criticized the weak yen and argued that it gives Japanese manufacturers an unfair trade advantage.
The late-July action marked the first Tokyo-Washington joint intervention to support the yen in nearly three decades. Officials took the step after the currency tumbled to its lowest level against the dollar since the 1980s. The Asian nation spent a record ¥15.4 trillion ($97.5 billion) on intervention in the month through Aug. 26, according to Finance Ministry data. Finance Ministers Satsuki Katayama and Bessent have both signaled a willingness to intervene again if necessary.
Strategists warn the yen could move back toward 160 per dollar if the Bank of Japan is seen struggling to keep pace with the Fed’s pace of tightening, while concerns over Japan’s fiscal outlook under Prime Minister Sanae Takaichi’s expansionary spending plans also weigh on the currency. The yen was little changed on Wednesday at 157.95 against the US currency.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing