Japan’s Katayama vows action as yen weakens past 160

Japanese Finance Minister Satsuki Katayama said on Friday, November 13, that Tokyo will "respond appropriately" to currency volatility after the yen briefly weakened past 160 per dollar. She is the second senior official in two days to warn markets that authorities could step in again, Reuters reported.finance.yahoo.com

"Recent movements in the foreign exchange market have been one-sided and rapid," Katayama said at a regular news conference. "We will continue to work closely with the US Treasury and respond appropriately". Her comments came a day after the New York Fed revealed that Washington bought yen alongside Tokyo this summer. That disclosure gives her reference to the US Treasury more weight than usual.finance.yahoo.com

Yen slides on Fed outlook

The dollar-yen pair, USD/JPY, rose above 160 for the first time since early September after traders took a more hawkish view of the Federal Reserve's interest-rate path. The Wall Street Journal News Corp ↘ 2.54% described 160 as a level widely seen as an intervention warning zone. The yen then recovered slightly. Katayama's remarks followed one from Atsushi Mimura, Japan's top currency diplomat, on Thursday. Mimura said "it's still too early to forget what happened this summer." In his first remarks on currencies since late September, he said recent moves had been excessively rapid. According to Jiji Press, the dollar slipped back from near 160 after he spoke, as traders grew cautious about possible intervention.reuters.com+3

US role revealed

On Thursday, the Federal Reserve Bank of New York said in its quarterly report to Congress that the US Treasury bought Japanese yen during the July–September quarter. It also said the Fed itself did not intervene. The New York Fed bought 79.4 billion yen in the spot market on July 31, paying with euros from the Exchange Stabilization Fund, to counter what the Treasury viewed as "disorderly moves" in the currency. It was the first US purchase of yen to support the currency since 1998.fidelity.com+1

Japan intervened on three days between July 30 and August 3. It spent a record 15.4 trillion yen as the currency fell to near 164 per dollar, its weakest level in 40 years.finance.yahoo.com

Will Tokyo act alone?

Investinglive noted that Katayama declined to comment on whether Japan was intervening. She said only that the US and Japan had shared their view on currencies at a summit. Analysts at Mizuho Securities suggested that political pressure could push Tokyo to act on its own. "If dollar breaks above 160 and the weaker yen fuels inflation, increasing the risk of a decline in support for Prime Minister Sanae Takaichi's government, Tokyo could carry out unilateral intervention," they wrote.investinglive.com+1