US led January yen rate checks, eyed joint intervention with Japan, Nikkei reports
Banknotes of Japanese yen are seen in this illustration picture taken September 22, 2022. REUTERS/Florence Lo/Illustration
TOKYO, Feb 24 : U.S. authorities took the initiative in conducting January "rate checks" to prop up the yen and were ready to conduct joint intervention on Japan's request, the Nikkei newspaper reported on Tuesday, citing unidentified U.S. government sources.
The rate checks by the New York Federal Reserve, which acted on behalf of the U.S. Treasury Department, were made without request by Japan's Ministry of Finance, the paper said.
Asked about the report, Japanese finance minister Satsuki Katayama told reporters on Tuesday that she has been in close dialogue with U.S. authorities over the four months since she took the post, and that communication "has become even tighter" recently.
"Since both sides have various things we must protect, I believe we can say that we are each doing our jobs properly," she said at a regular press conference.
The Nikkei said U.S. Treasury Secretary Scott Bessent spearheaded the rate checks on concern that political uncertainty prior to Japan's general election could destabilise its market and ripple through global financial markets.
U.S. authorities conducted the rate checks as a preliminary step toward yen-buying intervention, and considered intervening in the exchange-rate market to prop up the currency if Tokyo requested such a step, the paper said, citing senior officials close to Bessent.
Several senior U.S. officials pointed out that the rate check led by Bessent was "based upon the principle that the U.S. is prepared to use its economic strength to stabilize its allies," the paper said.
Katayama declined to comment on Tuesday on the possibility of coordinated interventions with the United States, though she said in January she would not rule out any options to counter excessive foreign exchange volatility including such joint interventions.
The U.S. Treasury Department was not immediately available to comment.
The yen's spikes occurred on three occasions in January, with the sharpest moves following reports of an unusual rate check by the New York Federal Reserve, when the yen slid near the psychologically important 160 mark, a level markets see as heightening the chance of yen-buying intervention.
The U.S. central bank last week confirmed it had asked dealers last month for quotes on dollar/yen rates at the behest of the U.S. Treasury, an unusual move that strengthened the stubbornly weak yen and put investors on alert for the first joint U.S.-Japan currency intervention in 15 years.
The yen surged over 1 per cent to a three-month high of 152.10 per dollar after the rate checks - often seen as a precursor to official intervention. It stood around 154.60 in Asia on Tuesday.
Bessent had denied last month that the U.S. had intervened in the currency market. Japanese officials have stayed mum on whether they had made rate checks or intervened in the market.
A weak yen has become a source of headaches for Japanese policymakers as it pushes up import prices and the broader cost of living for households.
