The U.S. Treasury Department has signaled to major banks its potential involvement in currency markets to bolster the Japanese yen against the dollar. This communication, delivered via the New York Fed, suggests the Treasury might execute trades to support the yen's exchange rate, which has weakened significantly, nearing multi-decade lows.

Some banks were reportedly instructed to prepare for trades involving the exchange of yen for euros, a currency held within U.S. foreign-currency reserves. This alert coincides with speculation among investors about a potential coordinated international effort to strengthen the yen, with Japanese authorities also believed to be participating.

In recent trading, the yen showed strength, moving from near 164 to the dollar to surpassing 160. Traders attribute this strengthening to yen purchases by Japanese authorities and anticipation of U.S. intervention. Japanese Finance Minister Satsuki Katayama acknowledged international awareness of the yen's decline and noted the significance of U.S. Treasury Secretary Scott Bessent's warnings about its undervaluation.