Yen Jumps Against Dollar; Nikkei Says US and Japan Likely Intervened

Japan and the US appear to have moved simultaneously in the foreign-exchange market to stem the yen’s weakness.

Nihon Keizai Shimbun reported on July 31 that the yen’s sharp rise against the dollar in New York trading a day earlier, when it briefly strengthened to 157.80 per dollar, was driven by yen-buying and dollar-selling by the Japanese government and the Bank of Japan. The newspaper also said US monetary authorities conducted a rate check, a step that typically precedes market intervention.

A rate check refers to authorities asking major banks about foreign-exchange trading conditions before entering the market. US authorities were also reported to have conducted a rate check on the yen in January under the direction of US Treasury Secretary Scott Bessent.

After 10:30 p.m. on July 30 in Japan, the dollar was trading at about 162.8 yen before the move reversed sharply. The exchange rate fell more than 2% in about 50 minutes, triggering a sudden surge in the yen.

The dollar later recouped part of the loss, with the exchange rate rising back to 159.54 yen as of 6 a.m. on July 31.

Nikkei said the Federal Reserve Bank of New York requested rate checks from several banks at the instruction of the US Treasury Department. It described simultaneous action by US and Japanese authorities as unusual.

The newspaper also said US and Japanese fiscal authorities appeared to have chosen a moment when intervention could be more effective, with the dollar already weakening after the Federal Reserve left interest rates unchanged.

The Bank of Japan is expected to keep its policy rate unchanged at about 1.0% at its monetary policy meeting on the morning of July 31. Its stance on future rate increases after the decision could be the next variable for the yen-dollar exchange rate.

Ko Jeong-sam, Hankyung.com reporter, jsk@hankyung.com