▲ Japanese Finance Minister Satsuki Katayama
Japanese Finance Minister Satsuki Katayama announced today, August 3, that the Japanese and U.S. governments jointly conducted an intervention to buy the yen on July 31.
According to Kyodo News and NHK, Finance Minister Katayama made the announcement via a statement, explaining that this joint intervention was carried out in accordance with the joint statement issued by the U.S. and Japanese finance ministers in September of last year.
Katayama emphasized that the intervention was a "response to the recent excessive fluctuations and disorderly movements of the yen," adding that Japan will maintain close communication with the U.S. and "will not hesitate to take further joint interventions in the future."
In addition, Japan stated that it plans to utilize a facility provided by the U.S. Federal Reserve (Fed), which allows it to sufficiently secure dollar funds using U.S. Treasuries as collateral without having to sell off its holdings of U.S. government bonds.
If Japan were to mass-sell its holdings of U.S. Treasuries to raise dollars, concerns would arise over falling U.S. Treasury prices and surging interest rates.
According to Japanese government officials and other sources, U.S. and Japanese authorities unusually intervened jointly in the foreign exchange market on July 31 to correct the weak yen.
The Japanese government and the Bank of Japan stepped in to buy yen, while the U.S. Department of Treasury reportedly carried out market intervention through the Federal Reserve Bank of New York by selling euros and buying yen.
The dollar-yen exchange rate approached 164 yen late last month, pushing the value of the yen to its lowest level in about 40 years. This is interpreted as a alignment of positions between Washington and Tokyo that such a historic depreciation of the yen needed to be corrected.
(Photo: AP, Yonhap News)
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