Global markets went on alert after Japan’s yen recorded its biggest move in six months, fuelling speculation of official currency intervention.
Reports indicated the New York Federal Reserve contacted major banks, a step often associated with coordinated foreign exchange action.
Japan’s Prime Minister warned against “abnormal” currency movements, pushing the dollar-yen rate sharply lower from near 160 to around 155.6.
Traders noted that short yen positions sit at decade highs, increasing the risk of sharp market dislocations if volatility accelerates.
“With short yen positions at decade highs and elections approaching, officials appear ready to act again, especially if the currency weakens further,”
Walter Bloomberg said.
Analysts said any coordinated US–Japan intervention could weaken the dollar and inject liquidity into global markets.
Historical examples such as the Plaza Accord and the Asian Financial Crisis response showed similar actions stabilised the yen and lifted risk assets.
Market commentators warned that unilateral Japanese action could force heavy US Treasury sales, raising risks for global debt markets.