By Fabiola Arámburo and David Lawder
July 31 (Reuters) – The U.S. Treasury stepped into the currency market on Friday to back the battered yen, the Financial Times reported, marking Washington’s first intervention along with Tokyo to support Japan’s currency in more than a decade as it languishes near 40-year lows.
The Federal Reserve Bank of New York conducted a sale of euros to buy yen on behalf of the Treasury through Goldman Sachs and Morgan Stanley, the FT said, citing people familiar with the matter. The report did not indicate any amounts of yen purchased.
The reported action would be the U.S. Treasury’s first direct support for the yen since 2011, when it coordinated with fellow G7 nations to stabilize markets after Japan’s earthquake and tsunami disaster.
Earlier on Friday, the U.S. Treasury informed a number of banks that it might intervene in the yen market and that they should “stand ready for future action,” a source familiar with the matter told Reuters.
A Reuters photo of U.S. Treasury Secretary Scott Bessent’s notepad during a cabinet meeting at Camp David in Maryland showed that he was contemplating U.S. purchases of $5 billion to $10 billion worth of Japanese yen.
The notepad in the photo, taken over Bessent’s shoulder during an on-the-record portion of the meeting, bears the underscored words: “To Do” followed by “Buy Japanese Yen (JPY) $5-10 bil.”
The Treasury did not immediately respond to requests for comment on the FT report and the Bessent notepad photo.
The New York Fed and Morgan Stanley also did not immediately respond to request for comment outside regular business hours. Goldman Sachs declined to comment.
News of the potential intervention by the Treasury helped push the yen higher against the dollar on Friday from near 40-year lows earlier this week, with a notable jump during late afternoon trading on Friday. Data from LSEG showed that the dollar dropped from about 158.9 yen at around 4:14 p.m. EDT(2014 GMT) to about 157.6 yen just before 5 p.m. EDT (2100 GMT) — a drop of about 0.8%.
Japan may have sold as much as $58.97 billion to buy yen on Thursday, central bank data indicated on Friday, signaling repeated efforts to stem the yen’s weakness.
(Reporting by Fabiola Arámburo in Mexico City and David Lawder in Chicago; Editing by Tom Hogue, William Mallard and Shri Navaratnam)
Comments