US Treasury Warns Banks of Potential Yen Intervention

The US Treasury has informed banks that it may intervene in Japan's yen market on Friday, according to a source familiar with the matter. The notice was channeled through the Federal Reserve Bank of New York and told banks to 'stand ready for future action.' This comes after Japanese authorities stepped in to prop up the yen, which saw its biggest weekly rise since February.

The potential intervention has already had an impact on the market, with the yen trading higher against the dollar. The last time the US Treasury intervened directly to prop up Japan's yen was in 2011 as part of a coordinated action by G7 countries to stabilize the currency after a devastating earthquake and tsunami rocked Japan.

U.S. Treasury Secretary Scott Bessent told Fox Business Network that the yen 'seems very undervalued to me' and that Japanese Prime Minister Sanae Takaichi was enacting 'strong policies' that would help Japan's economic fundamentals. Bessent also stated that 'we think excess volatility in the yen isn't healthy' and that the yen has 'substantially overshot what would be called an equilibrium price.'