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. “I’m not going to comment on whether they did or didn’t intervene,” Yellen told reporters Saturday following a speech in Mesa, Arizona. “I think that that’s a rumor.”
Still, she noted that the yen “did move quite a bit in a relatively short period of time,” and emphasized that interventions like these are expected to be rare and involve consultation.
Japanese authorities were suspected to have entered the market to support the yen on two occasions in the past week. This came after the yen weakened beyond 160 to the dollar for the first time in 34 years, and again after Federal Reserve Chair Jerome Powell hinted that a rate hike was unlikely to be the US central bank’s next move.
The actions of the Fed have a direct impact on the yen-dollar exchange rate, with hikes weakening the yen relative to the dollar. Bloomberg analysis of the Bank of Japan’s current account data suggests that Japan may have spent almost $60 billion on these interventions.
Yellen’s statements on Japanese intervention have varied over the past two years, with her emphasizing the importance of allowing the market to determine exchange rates. She has also stated that interventions should only be aimed at smoothing out volatility, not influencing exchange rates.
Yellen was in Arizona to speak about the Biden administration’s economic policies and warned against a turn away from democracy in the US, stating that it would undermine the country’s economic strength.