Speculation Mounts Japan to Buy Yen, Perhaps With US Help

Core Viewpoint - Speculation is increasing that Japanese authorities may intervene in currency markets to stop the yen's decline, potentially with support from the US government [1][2] Group 1: Yen's Performance - The yen appreciated by as much as 1.75% to 155.63 per dollar on Friday, marking its strongest level of the year and the largest one-day increase since August [1] - This surge reversed a downward trend towards levels last seen in 2024, when Japan intervened to buy its currency [1] Group 2: US Involvement - Reports indicate that the Federal Reserve Bank of New York has reached out to financial institutions regarding the yen's exchange rate, suggesting a possible groundwork for intervention [2] - Wall Street interprets these inquiries as a sign that both US and Japanese authorities are concerned about the yen's value [3] Group 3: Government Responses - Japan's finance minister and top currency official have issued warnings to speculators following the yen's depreciation [4] - Previous interventions occurred when the yen exceeded the 160-per-dollar level, often preceded by rate checks to signal authorities' readiness to act [4][5] Group 4: Market Volatility - Recent trading in the yen has been volatile, coinciding with turmoil in the Japanese government bond markets ahead of the Bank of Japan's policy meeting [6] - The yield on Japan's 40-year bond reached its highest level since its introduction, driven by concerns over government spending and rising inflation [6]