Japan-US foreign exchange coordination signal strengthens? Japan says it has high-frequency communication with the United States and its relationship is “closer”

# Zhang Yaqi

Japan’s finance minister has stated that Tokyo is in close communication with the U.S. on exchange rates, sparking strong market expectations of a joint U.S.-Japan intervention to support the yen. While U.S. authorities recently conducted a currency check, official Japanese data confirms it did not participate. The yen is currently trading around 155 per dollar; amid the Trump administration’s preference for a weaker dollar, markets estimate intervention could push the yen back to the 142 level.

Japanese Finance Minister Satsuki Katayama said on Tuesday that Japan maintains constant, close dialogue with the United States on foreign exchange developments, and markets are on high alert for potential joint currency intervention by the two countries to prop up the yen.

“Over the past four months, I have been in close communication with U.S. officials, and our relationship has grown even stronger during this period,” Katayama told a regular press conference. “Given that both sides have respective responsibilities to safeguard, I believe we can both say we are fully carrying out our duties.”

Her comments come as foreign exchange traders remain highly vigilant over potential market intervention. Currency checks are widely viewed as preparatory steps for currency intervention. In late January, the yen suddenly surged to the mid-155 range, a move markets largely attributed to a currency check by U.S. authorities, possibly in coordination with Japan.

Minutes from the Federal Reserve’s January meeting confirmed that the New York Fed conducted a currency check on behalf of the U.S. Treasury. However, subsequent data from Japan’s Ministry of Finance confirmed the Japanese government did not participate in that January yen rally.

## Currency Check Sparks Intervention Speculation

Katayama declined to comment on local media reports that last month’s currency check by U.S. authorities was led by Treasury Secretary Scott Bessent.

As Bloomberg reported, currency checks are widely seen as preparation for currency intervention, so news of potential joint U.S.-Japan action to support the yen has put forex traders on edge. Last week’s release of the Fed’s January meeting minutes confirmed the New York Fed conducted a currency check on behalf of the U.S. Treasury.

In late January, after approaching the dangerous 160 level, the yen suddenly strengthened sharply to the mid-155 range. Markets widely attributed this move to a currency check by U.S. authorities, possibly in coordination with Japan. However, data later released by Japan’s Ministry of Finance confirmed the Japanese government did not participate in that yen appreciation.

## Yen Remains in Danger Zone

Markets continue to brace for possible currency intervention, as the yen remains near 160 per dollar—a level not seen since July 2024, when the Japanese government intervened with massive dollar sales to support the currency. In Tuesday trading, the dollar-yen pair stood at 155.08.

Junichi Makino, economist at SMBC Nikko Securities, said that given President Trump’s remarks seen as welcoming a weaker dollar, the U.S. is unlikely to object if the Japanese government decides to intervene by buying yen and selling dollars.

Makino said that if intervention occurs, the yen could 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’s tariffs, Katayama pledged to continue monitoring further developments and ensure Japan’s committed investments in the U.S. proceed steadily.

Trump is considering new national security tariffs after a Supreme Court ruling invalidated many of the tariffs imposed during his second term.

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