Analysis-US rate check masks stiff hurdle to coordinated yen intervention

By Makiko Yamazaki and Leika Kihara

TOKYO, Jan 26 (Reuters) - The antithetic complaint cheque by the New York Federal Reserve that triggered a spike successful the stubbornly anemic yen has lowered the threshold for intervention, but coordinated Japan-U.S. selling of dollars inactive looks highly improbable astatine this stage.

The Fed's enactment precocious connected Friday was the strongest awesome to day that Japanese ​and U.S. authorities were moving intimately unneurotic to stem the currency's decline, keeping markets connected precocious alert for intervention.

Yet, nonstop coordinated involution whitethorn not hap arsenic rapidly arsenic markets whitethorn beryllium ‌expecting, analysts say, partially owed to home considerations successful the U.S. - suggesting Washington's enactment for Japan's concerns implicit an excessively anemic yen is apt to widen lone to complaint checks for now.

"Past coordinated involution came successful precise uncommon circumstances specified arsenic during a fiscal ‌crisis oregon a large earthy disaster," said Junya Tanase, main Japan currency strategist astatine JP Morgan. "We deliberation the region betwixt associated complaint checks to coordinated involution is rather big."

For now, fears of involution unsocial person pushed the yen disconnected 18-month lows, offering immoderate alleviation to Japanese policymakers fretting astir the inflationary interaction of the currency's declines.

To beryllium sure, the Fed's complaint cheque didn't hap successful isolation.

It was a culmination of a five-year effort by Japan to transportation the U.S. into signing past twelvemonth a bilateral connection authorising usage of currency involution to combat excessive volatility, accidental officials progressive successful the negotiations.

Japanese Finance Minister Satsuki Katayama has repeatedly stressed that she was aligned with U.S. Treasury ⁠Secretary Scott Bessent connected currency issues.

Her informing against yen bears reached a ‌peak connected January 16, erstwhile she said Japan volition instrumentality decisive enactment against speculative yen moves. When asked astir the accidental of associated Japan-U.S. action, she said "no options are excluded."

Washington besides had crushed to articulation Japan's efforts to combat the marketplace rout that pushed down not conscionable the yen but Japanese authorities bonds with spillover into ‍the U.S. Treasury market.

Bessent signalled Washington's displeasure implicit the repercussions from the rising Japanese yields, saying successful Davos connected January 20 that it was "very hard to disaggregate the marketplace absorption from what's going connected endogenously successful Japan."

Days later, BOJ Governor Kazuo Ueda underscored the bank's readiness to enactment intimately with the authorities to incorporate crisp rises successful yields, including via exigency bond-buying operations.