Yellen's new intervention comment: Rumor!

US Treasury Secretary Yellen has described claims that the Bank of Japan intervened in the exchange rate last week as “rumors.” Regarding the sharp fluctuations in the value of the Japanese yen last week, US Treasury Secretary Janet Yellen said, “I’m not going to comment on whether they intervened or not. I think it’s a rumor.” Still, Yellen said the yen has “moved quite a bit in a relatively short period of time,” and added, “we would expect interventions of this kind to be rare and to be consulted in advance.” Japanese authorities are thought to have entered the market twice last week to support the yen. One of these came after the yen breached 160 against the dollar for the first time in 34 years, and the other after Fed Chair Jerome Powell ruled out a rate hike. Bloomberg’s analysis of the Bank of Japan’s current account data suggests that Japan may have spent about $60 billion on interventions. Speaking towards the weekend, Japanese Finance Minister Shunichi Suzuki declined to confirm that they intervened. Yellen’s explanations for Japan’s interventions over the past two years have varied. She regularly points to the G-7 agreement that exchange rates should be determined by the market, and she also says interventions can be justified when they are aimed only at smoothing volatility but not at influencing exchange rates.