US Treasury Secretary Warns Against Investing in Currency Market after Surge in Japanese Yen

Although she refused to confirm The intervention of the Japanese authorities In the currency market, the Secretary of the US Treasury recognized the sharp movements that saw the price of the dollar against the Japanese yen this week, confirming her previous warnings against giving influence on world forces. Supply and demand In large economies. “I’m not going to comment on whether they intervened or not. I think that’s a rumor,” Yellen told reporters Saturday night after a speech in Mesa, Arizona. However, she believed that the yen moved “a little bit in a very short period of time,” she said, “We expect these interventions to be rare and that consultations will take place.”

Twice over the past week, Bloomberg has speculated that Japanese authorities may have intervened Japanese currency market To support the yen. The first time was after the yen fell to more than 160 yen against the dollar for the first time in 34 years, and the other was after Federal Reserve Chairman Jerome Powell said it was unlikely e interest rate hike is the next step for the US central bank. bank. Bloomberg analysts said the recent moves by Japan’s Finance Ministry and Central Bank reflect the tough stance taken by the authorities in what could be a long battle to support the yen.

A rate hike by the Fed weakens the yen against the dollar, so Powell’s comments made it easier for yen buyers to move the currency in the opposite direction. As a result of the Federal Reserve’s delay in lowering US interest rates, against a backdrop of persistent inflation in the world’s largest economy, the dollar rose against the currencies of other major economies, to especially the Japanese yen. The previous week, the price of the dollar exceeded the level of 160 Japanese yen for the first time since the 1980s. A Bloomberg analysis of Bank of Japan current account data showed that Asian countries may have spent nearly $60 billion on measures aimed at supporting their currencies. By the weekend, Finance Minister Shunichi Suzuki refused to confirm Japan’s intervention in the currency market.

Yellen’s statements regarding Japanese intervention have varied over the past two years, but she has referred more than once to a long-standing agreement between the Group of Seven countries to allow the market to adjust exchange rates. verify money. She also said that intervention could only be justified if it aimed to reduce volatility, but not affect exchange rates, something she reiterated on Saturday. In previous cases of intervention to increase the value of the yen, the US Treasury Secretary avoided criticizing the Japanese authorities. Yellen was in the state of Arizona, which represented a battleground, to talk about the economic policies of the Biden administration. She also spoke on Friday in Sedona saying that a move away from democracy in the United States would strengthen the economic strength of the country.