US Treasury bought 79.4 billion yen, New York Fed discloses

The Federal Reserve Bank of New York disclosed on 12 November that it bought 79.4 billion yen ($497.37 million) for the US Treasury on 31 July, selling euros in the spot market, where currencies are traded for immediate settlement.

CNA said the purchase was the first US yen-buying intervention since 1998. The New York Fed’s quarterly report said it acted for the Treasury; the Federal Reserve did not intervene on its own in foreign exchange markets during the July-to-September quarter.

How the intervention worked

The New York Fed said the purchase was intended to counter moves in the yen that the Treasury viewed as disorderly. The euros came from the Exchange Stabilization Fund, a Treasury emergency reserve fund normally used for currency intervention. A 1934 law established the fund and authorized it to deal in gold and foreign exchange to stabilize the dollar’s exchange value.

On 30 July, press reports emerged that the New York Fed had requested dollar-yen rate checks. The bank said it made those checks solely for the Treasury, acting as the government’s fiscal agent. The yen rose 2.3% against the dollar that day.

Japan’s Ministry of Finance acted in coordination and intervened with 15.4 trillion yen (about $96.5 billion) during the quarter, a separate amount from the US purchase, the New York Fed said. Japan’s ministry sought to counter what it saw as excessive volatility and disorderly yen moves.

Yen weakens after summer recovery

The yen strengthened as the dollar fell from around 164 yen to around 155 yen between 30 July and 3 August, the New York Fed said. By 12 November, the yen had weakened back toward 160 per dollar, its weakest level since September.

US Treasury Secretary Scott Bessent said on 2 August that the United States would not hesitate to participate in further joint intervention. On 12 November, Japan’s top currency diplomat, Atsushi Mimura, warned that it was too early to forget the summer intervention.

Mizuho Securities analysts identified a risk of further Japanese intervention. They forecast that the dollar would keep rising against the yen, citing US economic resilience and persistently high inflation that they linked to strong investment in superintelligence (SI).