By Ankur Banerjee, Yena Park and Samuel Indyk SEOUL/SINGAPORE/LONDON, July 31 Japan and South Korea both stepped in to buy their currencies on Thursday, sources and analysts said, while signs of U.S. support grew on Friday in a rare coordinated intervention that marks an…
calation in efforts to stem currency weakness. The intervention gave the yen its biggest boost in almost two years and, if the past is any guide, any joint effort with the U.S. may prove strong enough to turn around the battered currency. “It helps to give the story more credibility, that it could be more durable, that at least the Ministry of Finance in Japan is not fighting everyone else,” said Dominic Bunning, head of G10 FX strategy at Nomura in London
Japan conducted its yen-buying intervention in New York hours on Thursday, a market source told Reuters. Bank of Japan data suggested Japan may have sold as much as $58.97 billion to support the yen, though definitive figures are not due for another month. U.S.
MAY STEP IN Reuters reported that the U.S. Treasury had informed a number of banks that it may intervene in the yen market on Friday, and that banks should “stand ready for future action”, citing a source. “This fits with the view in the market that the New York Fed has been carrying rate checks, so it’s adding to the nervousness of market participants that there could be further intervention,” said Lee Hardman, currency strategist at MUFG. The Nikkei newspaper earlier reported that U.S. authorities had conducted rate checks on Thursday – asking banks at what rate they would sell currency – often seen as a precursor to intervention.