Investment firm Arkevium stated that the probability of the New York Federal Reserve conducting a rate check to support the Japanese yen is likely no higher than 25% to 30%. Maxence Visseau, founder of the macro trading strategy-focused firm, indicated that a rate check by the New York Fed is a possibility. U.S. Treasury Secretary Scott Bessent has shown interest in coordinating with Tokyo, primarily because the rising term premium on Japanese government bonds has spilled over into U.S. Treasuries, directly impacting the U.S. government's borrowing cost objectives. A rate check would be logical as it would help conserve intervention resources. Under International Monetary Fund rules, if Japan wishes to maintain its free-floating exchange rate system, it can only conduct two more three-day interventions before November. This gives Tokyo strong incentive to seek assistance from Washington rather than intervening alone using its reserves. One key consideration is that Bessent has publicly reiterated his support for a strong U.S. dollar, and former President Trump has also expressed satisfaction with the current level of the dollar. There is no political environment resembling that of the Plaza Accord, Visseau noted, referring to the 1995 agreement. His baseline expectation is that any U.S. intervention would be limited to managing volatility when the yen approaches 160 per dollar. The goal would be to curb excessive speculation, as Washington lacks genuine willingness to reverse the yen's structural trend. Note: The yen surged strongly, fueling speculation about further intervention by Japan.
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