The U.S. Treasury directed the Federal Reserve Bank of New York to intervene in the foreign exchange market on July 31, purchasing yen to bolster the yen's exchange rate, which had been sliding and approaching four-decade lows. This marks the first joint yen-buying intervention by the U.S. in coordination with the Japanese government in over a decade. The yen staged a significant rebound in overnight trading sessions following the news.
Sources familiar with the matter revealed that the New York Fed, acting on behalf of the U.S. Treasury, converted euros into yen through financial institutions including Goldman Sachs and Morgan Stanley. The U.S. Treasury had earlier alerted major banks to prepare for potential currency intervention. Photographs taken by Reuters show a note from U.S. Treasury Secretary Scott Bessent during a Cabinet meeting at Camp David, with the operation "Buy $5-10 billion in yen" clearly marked. Neither the Treasury nor the New York Fed has publicly responded to the reports, and Goldman Sachs declined to comment.
Prior to the U.S. market entry, the Japanese government had intensified its own intervention efforts. Data released by the Bank of Japan and media reports indicate that Japanese authorities sold approximately $58.97 billion on July 30 to support the yen, and intervened again during New York trading hours on July 31. Japan's Ministry of Finance issued a statement on social media, emphasizing that Japanese monetary authorities possess "a wide range of tools to meet market liquidity needs" and stand ready to use mechanisms to maintain market order. The statement specifically noted that Japan can access dollar liquidity through the Federal Reserve's Foreign and International Monetary Authorities (FIMA) Repo Facility, without having to sell U.S. Treasuries directly, thus easing funding pressures from the intervention.
According to other media reports, the U.S. and Japan are expected to jointly announce policies as early as next week, aimed at warning against speculative yen selling to further stabilize the foreign exchange market. The yen had previously weakened to around 164 yen per U.S. dollar, its lowest level since 1986. Following the intervention news, the yen rallied significantly, with the dollar-yen rate falling to near 157.57 at the close of New York trading.
Public records show that the last time the U.S. directly intervened to support the yen was in 2011, when the G7 countries took coordinated action in the foreign exchange market following the Great East Japan Earthquake and the subsequent tsunami.
Editor's note: This article has been rewritten without the newspaper and editor information.
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