The US Treasury has decided to significantly expand its purchase operations to curb the rise in long-term interest rates in Japan and the US, while moves are emerging in Japan to clarify the funding sources for a consumption tax cut and maintain fiscal discipline. Attention is focusing on Japanese-US interest-rate trends, a key to curbing yen depreciation.
The US Treasury is reportedly to have significantly expanded its purchase operations in its weekly operations last week, apparently to curb the rise in long-term interest rates. This could also affect the yen's depreciation and long-term interest-rate trends in Japan. Japan is concerned about the spillover from rising US long-term interest rates, and maintaining fiscal discipline is being given priority.
In Japan, some analysts believe that the Takaichi administration is shifting its policy on the consumption tax cut away from simply withdrawing the cut and toward maintaining fiscal discipline by clarifying its funding sources. A former finance official described this as “a narrow path, but not impossible.”
Efforts by Japan and the US to prevent rises in long-term interest rates are also affecting foreign-exchange markets. After coordinated Japanese-US yen-buying intervention, dollar-yen briefly fell to ¥155 before moving back up to nearly ¥160. Some commentary has linked this move to rising long-term interest rates in Japan and the debate over the transparency of the funding sources.