On Friday, the U.S. Treasury intervened in the foreign exchange market by purchasing yen to support its value, a response to the currency's decline to levels not seen in 40 years. This intervention was facilitated by the Federal Reserve Bank of New York, which sold euros for yen through Goldman Sachs and Morgan Stanley.
Although the exact amount of yen purchased was not disclosed, the Treasury had previously indicated to banks that it might take action to stabilize the yen, suggesting a proactive approach to currency management. A notepad belonging to Treasury Secretary Scott Bessent indicated a potential purchase range of $5-10 billion.
The yen's value saw a notable increase following the announcement, with the dollar dropping from approximately 158.9 yen to about 157.6 yen within a short period. This intervention follows Japan's own efforts to bolster the yen, including a reported sale of up to $58.97 billion to buy yen just a day prior.
The Japanese Finance Ministry reassured markets of its readiness to utilize various tools to maintain market liquidity, including access to the Federal Reserve's FIMA repo facility, which allows for dollar liquidity without selling U.S. Treasuries.
The coordinated efforts between the U.S. and Japan signal a strong commitment to stabilizing the yen and preventing speculative pressures that could further destabilize the currency