The Federal Reserve acknowledged Wednesday that it conducted unusual dollar-yen exchange rate inquiries last month at the Treasury Department's direction. The move sparked speculation about potential joint U.S.-Japan currency intervention and temporarily strengthened the yen.
The Federal Reserve acknowledged Wednesday that it conducted unusual inquiries into dollar-yen exchange rates in January, acting on instructions from the U.S. Treasury Department in a move that caught financial markets’ attention and raised speculation about possible currency intervention.
According to meeting minutes from the Fed’s January 27-28 session released Wednesday, the central bank’s trading desk sought price quotes from dealers regarding the dollar-yen exchange rate specifically at Treasury’s direction. The Fed noted in its minutes: “In the days leading up to the meeting, the dollar had depreciated markedly after reports that the Desk had made requests for indicative quotes, known as ‘rate checks,’ on the dollar–yen exchange rate.” The minutes further explained: “The manager noted that the Desk had requested those quotes solely on behalf of the U.S. Treasury in the Federal Reserve Bank of New York’s role as the fiscal agent for the U.S.”
These uncommon rate inquiries by the New York Fed in late January caused the yen to gain strength against the dollar, marking an unusual development that put markets on edge about the possibility of the first coordinated U.S.-Japan currency market intervention in a decade and a half. However, no clear evidence of large-scale intervention by either nation materialized following the initial reports.
Treasury Secretary Scott Bessent has publicly rejected suggestions that the United States was actively intervening in foreign exchange markets.
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