The Japanese yen strengthened against the US dollar for the second consecutive day as market watchers widely suspect government intervention in the foreign-exchange market. Tokyo authorities had repeatedly warned they might get involved in the global forex market to prop up the yen after its freefall this year.
The USD/JPY currency pair fell 0.8% to 158.23, from an opening of 159.50, at 17:48 GMT on Friday. The yen has strengthened more than 3% against the greenback this week, climbing to a two-month high after recently declining to a 40-month low.
The GBP/JPY currency pair tumbled 0.59% to 213.54, from an opening of 214.80. The yen has also risen more than 2% against the pound sterling this week.
While Tokyo has not announced any official intervention, Washington has suggested that the Japanese government has employed measures to lift the yen.
Treasury Secretary Scott Bessent, in a Friday post on X, said that the Bank of Japan has indicated a commitment to financial and monetary stability.
“Japan’s economy continues to perform well under Prime Minister Takaichi, Governor Ueda, and the Bank of Japan Board, which has demonstrated a strong commitment to monetary and financial stability,” Bessent said.
Meanwhile, in an interview with Fox Business, Bessent stated that the yen is undervalued at a time when the economy is performing well.
“The Japanese yen seems very undervalued to me. The currency is very cheap. The economy is doing well. The Prime Minister is very popular and enacting very strong policies. And I think we’re going to see the fundamentals come through,” Bessent said.
“The currency markets tend to overshoot. And I believe the Japanese yen has substantially overshot what would be called an equilibrium price.”
Japan’s Ministry of Finance did not confirm whether it instituted measures to stimulate the yen.
Yields on Japanese government bonds were mixed. The two-year fell half a basis point to below 1.52%, while the 30-year yield continued to march toward 4% at the end of the trading week.
The US Dollar Index (DXY), a gauge of the greenback against a weighted basket of currencies, was little changed at the end of the week, hovering around 99.90. The index will register a weekly loss of about 1.5%, but remains up 1.6% year-to-date.