Washington bought Japanese yen in the July-to-September quarter, while the Federal Reserve made no solo foreign exchange interventions. The New York Fed's quarterly report shows Washington acted alongside Tokyo to support the currency.
Treasury bought yen in the July-to-September quarter, but the Federal Reserve did not intervene of its own accord in foreign exchange markets in the same period, the Federal Reserve Bank of New York said on Thursday. The quarterly report on currency market operations detailed actions taken on behalf of the Treasury to stem a sharp weakening of the yen.
That purchase was the first US yen-buying intervention since 1998. The report shows Washington acted alongside Tokyo to support the Japanese currency.
New York Fed bought 79.4 billion yen on July 31
On July 30, press reports emerged that the New York Fed had requested rate checks on the dollar-yen rate. The report said the checks were made solely on behalf of the US Treasury, with the New York Fed acting as the government's fiscal agent. The yen rose 2.3% against the dollar that day.
The New York Fed bought 79.4 billion yen ($497.37 million) in the spot market on July 31, selling euros from the Exchange Stabilization Fund. According to the report, the purchase aimed "to counter what the US Treasury viewed as disorderly moves in the Japanese yen".
Japan intervened in coordination
Japan's Ministry of Finance acted in coordination, intervening with 15.4 trillion yen during the quarter to counter what it saw as excessive volatility and disorderly yen moves, the New York Fed added.
The yen recovered quickly. Between July 30 and August 3, the dollar-yen rate fell from around 164 yen per dollar to around 155 yen per dollar, the report said.
After the joint operation, Treasury Secretary Scott Bessent said the US would do whatever it takes to support Japan's effort to stabilize the yen.
Source: Investing.com
Trading involves risk.
Risk Disclaimer
