US Treasury tells banks further yen intervention is possible as yen surges

The US Treasury told banks today that further intervention to support the yen is possible, sending the Japanese currency sharply higher, Nikkei Asia reports. The rare signal from Washington underscores mounting concern over volatility in the dollar-yen exchange rate and raises the prospect of coordination with Tokyo. Traders, already on edge after recent yen weakness and suspected Japanese interventions, piled into the currency on the headlines.

According to Nikkei Asia, the guidance left open the timing and scope of any action, but its circulation alone jolted FX markets and pushed the yen higher against major peers. Any signal of US backing would mark a notable show of support for Japan’s efforts to steady its currency amid heightened volatility. Watch for any formal statements from the US Treasury or Japan’s Ministry of Finance, and for fresh moves in USD/JPY as traders test possible intervention lines. [Developing. This article will be updated.]