July 31 (Reuters) – The U.S. Treasury has informed a number of banks that it may intervene in the Japanese yen market on Friday and that they should “stand ready for future action,” a source familiar with the matter told Reuters.
The notice to banks, channeled through the Federal Reserve Bank of New York, comes a day after Japanese authorities stepped in to prop up the yen, setting the currency up for its biggest weekly rise since February, pulling it off of four-decade lows against the dollar.
News of the potential intervention by the U.S. Treasury helped push the yen higher against the dollar on Friday. It last traded at 159.09 to the dollar after trading as low 163.65 on Thursday.
The method of potential Treasury intervention was not immediately clear. The Federal Reserve has maintained a dollar liquidity swap line with the Bank of Japan and four other major central banks since 2013.
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