Speculation mounts that Japan could buy yen, possibly with US aid

Speculation mounted into the weekend that the Japanese authorities could be preparing to enter currency markets in a bid to halt the yen’s slide, possibly with the rare assistance of the US.

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An electronic board showing the yen-US dollar exchange rate. The yen rallied as much as 1.75 per cent to 155.63 per dollar on Jan 23, the biggest one-day surge since August 2025, which reversed what had been a slide towards levels last seen in 2024, when Japan stepped in to buy its currency.

(PHOTO: REUTERS)

The yen rallied as much as 1.75 per cent to 155.63 per dollar on Jan 23, extending the gains seen during the Asian trading day to its strongest level of the year. The move was the biggest one-day surge since August 2025 and reversed what had been a slide towards levels last seen in 2024, when Japan stepped in to buy its currency.

The jump in the US session came as traders reported that the Federal Reserve Bank of New York had contacted financial institutions to ask about the yen’s exchange rate. Wall Street saw those inquiries as potentially laying the ground for Japan to intervene to prop up the yen, perhaps even with the US government joining in.

"Neither US authorities nor Japanese authorities seem happy about the value of the yen right now," said Harvard economics professor Jason Furman, who served as chairman of the Council of Economic Advisers under former US president Barack Obama. "Everyone is on hair trigger for something that will change it."

Representatives for the New York Fed declined to comment. US Treasury representatives did not immediately respond to a request for comment. When it comes to exchange rates, the Fed traditionally takes its direction from the US Treasury.