Key facts
- Japan and the U.S. confirmed coordinated yen-buying intervention on Friday.
- This intervention aimed to counter excessive volatility and disorderly movements in the yen.
- The U.S. Treasury Secretary Scott Bessent confirmed U.S. participation and readiness for further joint intervention.
- Bessent also urged that the Federal Reserve's Foreign and International Monetary Authorities (FIMA) lending facility be 'upsized'.
- The FIMA Repo Facility allows countries with Treasury securities at the New York Fed to obtain dollar loans.
Japan and the United States confirmed coordinated currency market intervention on Friday to counter excessive volatility and disorderly movements in the yen, which had slid to 40-year lows. The dollar fell against the yen to 156.50 following the confirmation. U.S. Treasury Secretary Scott Bessent stated he would not hesitate to repeat such joint intervention and urged that the Federal Reserve's Foreign and International Monetary Authorities (FIMA) lending facility be 'upsized.'
The FIMA Repo Facility, created during the COVID-19 pandemic, allows countries holding Treasury securities at the New York Fed to obtain up to $60 billion in dollar loans. Bessent indicated this facility was used in the recent coordinated action. Japan, the largest foreign holder of U.S. Treasuries, could use the facility to raise funds for yen purchases without selling its holdings outright, which could otherwise push up yields.
Japan's Finance Ministry confirmed the intervention, and President Donald Trump had previously stated the U.S. was assisting Japan. The Bank of Japan has signaled potential early rate hikes, though it kept monetary policy steady in its recent meeting.