Japanese Finance Minister Satsuki Katayama will reportedly announce today that Tokyo and Washington have taken coordinated action in the currency market to arrest the yen’s slide to a 40-year low.
Katayama is likely to address the two countries’ resolve to combat what they consider a sharp decline in the yen, speaking on the condition of confidentiality due to sensitivity of the issue.
The announcement comes after market sources underlined rounds of yen-buying in the market by Japanese and US authorities intended to boost the Japanese currency from its lowest levels against the dollar since 1986.
According to a market source told Reuters, the Japanese government bought yen for dollars in New York trading hours on Thursday. The Bank of Japan data indicated it sold as much as $58.97 billion to support the yen.
Katayama’s top currency diplomat, Atsushi Mimura told reporters: “Going forward as the official responsible for currency policy, I would like to respond in close coordination with monetary policy.”
Critics have said Japan could encounter restrictions on continued yen-buying intervention as selling down its massive holdings to fund such actions can ultimately lead to a selloff in US debt and prompt a sharp increase in US yields.
On the contrary, some analysts observe the signs of Japan-US cooperation as triggered by Washington’s growing concern in recent years which could worsen if Tokyo failed to prevent a selloff in the yen and Japanese and government bonds. Nonetheless, maintaining market trust in Japan’s fiscal sustainability remains crucial.
