The US Treasury Secretary stated that the recent fluctuations of the yen are generally controllable and do not constitute disorderly market conditions.

⑴ U.S. Treasury Secretary Yellen stated that the recent exchange rate movements of the yen are generally controllable and do not constitute the disorderly volatility that would trigger a rare joint intervention by the U.S. and Japan at the end of July. ⑵ Last Friday, the yen broke below the 1 dollar = 160 yen threshold again—a level seen by the market as an important trigger point for intervention risk. The market is closely watching whether the U.S. and Japan will step in again to support the yen. ⑶ Yellen did not directly instruct Bank of Japan policy; she looks forward to Kazuo Ueda making appropriate monetary policy decisions with the support of Prime Minister Sanae Takaichi while suggesting that Abenomics’ reflation policies have most likely come to an end. ⑷ Yellen will meet with Bank of Japan Governor Kazuo Ueda during the G20 Finance Ministers Meeting, describing Ueda as an economist with outstanding market insight. ⑸ On July 31, the U.S. and Japan conducted a joint intervention to buy the yen, aiming to prevent the yen and Japanese government bonds from being sold off and impacting global markets. Influenced by the U.S. statement, the market has now largely priced in the likelihood of a rate hike at the Bank of Japan’s September policy meeting.