Mesa, Arizona – US Treasury Secretary Janet Yellen addressed concerns about the sharp fluctuations in the value of the yen this week, refraining from confirming whether Japan had taken steps to stabilize the currency. During a press briefing in Mesa, Yellen stated, “I’m not going to comment on whether they did or didn’t intervene. I think that that’s a rumor.”
Yellen emphasized that while the yen experienced significant movement within a short timeframe, such interventions should be infrequent, with prior consultation among involved parties. Recent reports indicate that Japanese authorities may have intervened in the market twice in response to the yen’s slide against the dollar and the Federal Reserve Chair’s comments on potential interest rate hikes.
Analysis of the Bank of Japan’s current account data suggests that Japan’s potential intervention activities may have reached a substantial value of nearly $60 billion. Despite these speculations, Finance Minister Shunichi Suzuki has refrained from confirming any official intervention by Japan in the currency market.
Yellen’s stance on foreign exchange interventions by Japan has been inconsistent over the past couple of years. While she often highlights the agreement among Group of Seven countries to let market forces determine exchange rates, she has also underscored the importance of interventions primarily for managing volatility rather than influencing exchange rates. The treasury secretary reiterated these points during her recent remarks.
Yellen’s visit to Arizona coincided with her discussions on the Biden administration’s economic strategies, aiming to provide insights on the government’s priorities and initiatives to support economic growth. She additionally shared her views on the implications of democratic integrity on the nation’s economic stability during a separate engagement in Sedona.
The ongoing debate surrounding Japan’s potential interventions in the currency market raises questions about the broader implications for global trade and financial stability. As international economic dynamics continue to evolve, policymakers and financial authorities face the challenge of striking a balance between market-driven exchange rates and necessary interventions to address excessive volatility.