Signals of Enhanced Japan-US Forex Coordination? Japan Says Frequent Communication with US, Relationship “Closer Than Ever”

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Japan’s Finance Minister Satsuki Katayama said on Tuesday that Japan continues to maintain close dialogue with the United States regarding foreign exchange trends, as the market is highly alert to the possibility of joint intervention by the two countries to support the yen.

Katayama stated at a routine press conference: “Over the past four months, I have maintained close communication with U.S. officials, and our relationship has become even closer during this period.” She added, “Given that both sides have their own responsibilities to protect, I believe we can both say we are thoroughly fulfilling our duties.”

This statement comes at a time when foreign exchange traders are highly vigilant about potential market intervention. Exchange rate checks are widely seen as preparatory steps for currency intervention. At the end of January, the yen suddenly surged into the mid-155 range, which the market generally attributed to exchange rate checks by U.S. authorities, possibly in coordination with Japan.

The Federal Reserve’s minutes from its January meeting confirmed that the New York Fed, representing the U.S. Treasury, conducted exchange rate checks. However, data later released by Japan’s Ministry of Finance confirmed that the Japanese government did not participate in the yen’s rise in January.

Exchange Rate Checks Stir Speculation of Intervention

Katayama declined to comment on local media reports that last month’s exchange rate checks by U.S. authorities were led by Treasury Secretary Scott Bessent.

According to Bloomberg, exchange rate checks are widely regarded as preparations for currency intervention, so news of potential joint U.S.-Japan intervention to support the yen has caused vigilance among foreign exchange traders. The Federal Reserve’s minutes from January released last week confirmed that the New York Fed, representing the U.S. Treasury, conducted exchange rate checks.

In late January, the yen sharply strengthened after approaching the dangerous 160 zone, rising to the mid-155 range. The market generally attributed this movement to exchange rate checks by U.S. authorities, possibly in coordination with Japan. However, data later released by Japan’s Ministry of Finance confirmed that the Japanese government did not participate in this yen rally.

The Yen Remains in the Danger Zone

The market continues to prepare for possible currency intervention, as the yen-to-dollar exchange rate remains near 160—a level not seen since July 2024, when the Japanese government supported the yen with large-scale dollar sales. In Tuesday’s trading, the dollar-to-yen rate stood at 155.08.

SMBC Nikko Securities economist Junichi Makino said that given President Trump’s comments, which have been interpreted as welcoming a weaker dollar, the U.S. would likely not oppose Japanese government action to buy yen and sell dollars.

Makino stated that if intervention occurs, the yen may rebound to its fair value based on interest rate differentials—estimated at around 142 yen per dollar.

Regarding the U.S. Supreme Court’s ruling on Trump tariffs, Katayama pledged to continue monitoring further developments and to ensure Japan’s investment commitments in the United States are steadily implemented.

Trump is considering new national security tariffs, following a Supreme Court ruling that invalidated many tariffs imposed during his second presidential term.

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