U.S. Government Decides on Coordinated Intervention Following Governor Ueda’s Remarks; Rate Hike Expected at September Meeting (Mainichi Shimbun)

The Japanese and U.S. governments are said to have carried out an unusual coordinated foreign-exchange intervention on 31 July, amid reports that the U.S. side had judged that the outlook for a rate hike at the Bank of Japan’s next meeting in September had strengthened. The U.S. side is said to have viewed Governor Ueda’s (植田) remarks at the end of July as positive toward an additional rate hike and to have finalized a policy of cooperating with the Japanese government on intervention to curb yen depreciation.

At a press conference after the 31 July meeting, Bank of Japan Governor Ueda (植田) said that, while recognizing the risk of upside pressure on prices, “it is also possible that the pace of rate hikes could be accelerated.” Following these remarks, there was growing acceptance on the U.S. side that they suggested a rate hike at the September meeting, and this is said to have prompted moves to support coordinated intervention by Japan.

Government officials are closely monitoring developments at the Bank of Japan, and some experts are said to believe that Governor Ueda’s (植田) remarks can be understood as suggesting a rate hike. The Bank of Japan and the government had been exploring measures to correct yen depreciation, while there have also been reports of behind-the-scenes moves to request coordinated intervention from the United States.

The coordinated intervention is described as an unusual measure carried out for the first time in 15 years since 2011, while yen-buying intervention is said to have occurred for the first time in 28 years since 1998. Reports say the measures were intended to curb sharp fluctuations in the dollar’s strength and the yen’s weakness. It has also been suggested that the U.S. explanation may have reflected expectations for an additional Bank of Japan rate hike.