According to Nikkei, citing U.S. government sources, the United States initiated “price surveys” in the USD/JPY market in January as a preparatory step for a potential intervention to support the Japanese yen. Washington is reportedly ready to conduct a coordinated intervention with Tokyo if requested.
The report states that the move was carried out through the Federal Reserve Bank of New York on behalf of the U.S. Treasury, without a direct request from Japan’s Ministry of Finance. This reflects a proactive American initiative to monitor market conditions amid the sharp volatility the yen experienced earlier this year. The newspaper noted that U.S. Treasury Secretary Scott Bessent led this action, amid concerns that political developments in Japan could disrupt domestic markets and spill over to global markets.
Meanwhile, Japanese Finance Minister Satsuki Katayama confirmed ongoing close coordination with the U.S., without providing details regarding the possibility of a joint intervention.
The yen came under significant pressure in January, particularly as it approached the 160 level against the dollar a level considered sensitive by markets, where official intervention is more likely. News of the “price surveys” caused the yen to rise by more than 1%, reaching a three month high of 152.10 against the dollar, before later retreating to around 154.60, highlighting the market’s sensitivity to any official signals of intervention.
Potential Impact on the Yen’s Movement
These developments suggest that the 160 level for the dollar may become an informal ceiling, prompting faster action by authorities, which could limit the pace of the yen’s decline in the near term. Confirmation of U.S. Japan coordination also enhances the credibility of any potential intervention, potentially leading speculators to reduce their positions against the yen.
As a result, the yen is likely to trade within a more disciplined range in the coming period, with a relative upward bias if intervention signals intensify, while the overall trend will remain influenced by interest rate differentials between the U.S. and Japan and developments in monetary policy in both countries.
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