Yellen cautions vs FX intervention after yen surge
US TREASURY Secretary Janet Yellen acknowledged sharp moves in the value of the yen this week, even as she declined to say whether Japan had intervened to support the currency.
鈥淚鈥檓 not going to comment on whether they did or didn鈥檛 intervene,鈥 Ms. Yellen told reporters Saturday following a speech in Mesa, Arizona. 鈥淚 think that that鈥檚 a rumor.鈥
Still, she said the yen 鈥渄id move quite a bit in a relatively short period of time,鈥 adding, 鈥渨e would expect these interventions to be rare and consultation to take place.鈥
Japanese authorities appeared to enter the market to support the yen on two occasions in the past week. One came after the yen weakened beyond 160 to the dollar for the first time in 34 years, followed by another after Federal Reserve Chair Jerome H. Powell said a hike was unlikely to be the US central bank鈥檚 next interest rate move.
Fed hikes weaken the yen relative to the dollar, so Mr. Powell鈥檚 comments made it easier for yen purchases to move the currency in the other direction.
Bloomberg analysis of the Bank of Japan鈥檚 current account data suggests Japan may have spent almost $60 billion on the actions. Near the end of the week, Finance Minister Shunichi Suzuki declined to confirm that Japan had intervened.
Ms. Yellen鈥檚 statements on Japanese intervention over the past two years have varied. She regularly points to a long-standing agreement among Group of Seven countries to allow the market to determine exchange rates. She has also said intervention can be justified only if it鈥檚 aimed at smoothing out volatility, but not to influence exchange rates. She repeated those points Saturday.
When Japan has previously intervened to strengthen the yen, however, she has avoided criticizing the moves.
Ms. Yellen was in the battleground state of Arizona to speak about the Biden administration鈥檚 economic policies. She also spoke Friday in Sedona to say that a turn away from democracy in the US would undermine the country鈥檚 economic strength. 鈥 Bloomberg News
