TOKYO, Feb 24 (Reuters) – U.S. authorities took the initiative in conducting the January “rate checks” to prop up the yen and were ready to conduct joint intervention on Japan’s request, the Nikkei newspaper reported on Tuesday, citing unidentified U.S. government sources.
The rate checks by the New York Federal Reserve, which acted on behalf of the U.S. Treasury Department, were made without request by Japan’s Ministry of Finance, the paper said.
U.S. Treasury Secretary Scott Bessent spearheaded the rate checks on concern that political uncertainty prior to Japan’s general election could destabilise its market and ripple through global financial markets, the Nikkei said.
U.S. authorities conducted the rate checks as a preliminary step toward yen-buying intervention, and considered intervening in the exchange-rate market to prop up the currency if Tokyo requested such a step, the paper said, citing senior officials close to Bessent.
Several senior U.S. officials pointed out that the rate check led by Bessent was “based upon the principle that the U.S. is prepared to use its economic strength to stabilize its allies,” the paper said.
Both Japan’s Ministry of Finance and the U.S. Treasury Department were not immediately available to comment.
The U.S. central bank last week confirmed it had asked dealers last month for quotes on dollar/yen rates at the behest of the U.S. Treasury, an unusual move that strengthened the stubbornly weak yen and put investors on alert for the first joint U.S.-Japan currency intervention in 15 years.
The rate checks came after the yen slid near the psychologically important 160 mark, a level markets see as heightening the chance of yen-buying intervention.
The yen surged over 1% to a three-month high of 152.10 per dollar after the rate checks – often seen as a precursor to official intervention. It stood around 154.60 in Asia on Tuesday.
Bessent had denied last month that the U.S. had intervened in the currency market. Japanese officials have stayed mum on whether they had made rate checks or intervened in the market.
A weak yen has become a source of headache for Japanese policymakers as it pushes up import prices and the broader cost of living for households.
(Reporting by Leika Kihara and Makiko Yamazaki; additional reporting by Mariko Katsumura; Editing by Chris Reese, Shri Navaratnam and Kim Coghill)
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