By Leika Kihara
TOKYO, Jan 28 (Reuters) – Japan may hold off on official intervention for now, with coordinated tactics involving the U.S. already helping to halt a one-sided slide in the yen, Atsushi Takeuchi, a former central bank official who took part in Tokyo’s market forays a decade ago, told Reuters.
Friday’s suspected rate checks by the New York Federal Reserve were an extremely rare event that showed Washington’s determination to cooperate with Japan’s efforts to arrest sharp declines in the yen, Takeuchi said.
“The presence of the U.S. made a huge difference as markets know they shouldn’t fight the Fed,” Takeuchi said in an interview on Wednesday.
“What authorities wanted to stop was a one-sided, sharp slide in the yen,” and therefore they are focusing more on yen moves rather than specific levels, he said.
“Now with suspected rate checks keeping markets on edge and preventing yen bears from testing the currency’s downside, Japan probably doesn’t need to directly intervene,” Takeuchi said.
Stepping in directly to prop up the yen could accelerate the currency’s rise and hurt stock prices, something Japanese authorities may not want as Prime Minister Sanae Takaichi heads into an election next month, he added.
The yen surged over 1% to a three-month high of 152.10 per dollar on Tuesday on talk of the U.S. and Japan conducting rate checks – often seen as a precursor to official intervention.
The rate checks came after the yen slid near the psychologically important 160 mark, a level markets see as heightening the chance of yen-buying intervention.
Takeuchi said the bout of yen spikes seen in the past few days was a sign Japanese authorities have succeeded in their psychological battle with markets.
“The biggest job of Japan’s top currency diplomat is to heighten and keep alive market fears of intervention,” Takeuchi said. “So far, Japan has succeeded in doing so.”
Japan has historically focused on preventing sharp yen rises that hurt its export‑reliant economy. But since 2022, its focus has shifted to defending the yen from excessive depreciation, which can fuel inflation and erode consumer purchasing power.
Takeuchi took part in several yen-selling interventions from 2010 to 2012. He is now chief research fellow at Ricoh Institute of Sustainability and Business.
(Reporting by Leika KiharaEditing by Ros Russell)
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