Bessent: Jan. FX rate check was initiated
TL;DR
The U.S. Treasury confirmed the Federal Reserve conducted a rare 'rate check' on the dollar-yen exchange rate in January 2026, signaling potential currency market intervention. Treasury Secretary Bessent denied direct intervention but the move reflects a more activist approach to manage exchange rates amid trade policy objectives.
Bessent: Jan. FX rate check was initiated
Treasury Secretary Confirms January FX Rate Check on Dollar-Yen Exchange Rate
The U.S. Treasury Department has confirmed that the Federal Reserve conducted a rare "rate check" on the dollar-yen exchange rate in January 2026 at its request, a move seen as a precursor to potential currency market intervention. The Federal Reserve's minutes from its January 27–28 meeting revealed that the New York Fed's trading desk sought indicative quotes for a significant purchase of yen, which coincided with a sharp depreciation of the dollar against the yen according to reports. The dollar fell from ¥158.50 to ¥152.45 between January 23 and 27, a notable shift in major currency markets.
The Treasury's request was made through the Federal Reserve Bank of New York in its role as the U.S. fiscal agent. While the Fed emphasized that no large-scale intervention followed, the rate check itself signaled a coordinated effort to influence exchange rates. Treasury Secretary Scott Bessent, however, denied allegations of direct intervention, stating, "Absolutely not," when questioned by CNBC. He reiterated the administration's commitment to a "strong dollar policy," arguing that sound economic fundamentals—such as reduced trade deficits—would naturally bolster the dollar over time according to CNBC reporting.
The move aligns with broader efforts under President Trump's America First Trade Policy to address perceived unfair currency practices by major trading partners. The Treasury's recent semiannual report highlighted concerns about China's lack of transparency in exchange rate policies and emphasized enhanced monitoring of economies like Japan, Korea, and Taiwan as detailed in the Treasury release. While no major trading partner was formally labeled a currency manipulator in the report, the U.S. has engaged in joint statements with several partners to reinforce commitments to transparent practices.
Analysts note that the rate check reflects a more activist approach by the White House to manage exchange rates, particularly amid diverging monetary policies between the U.S. and Japan. The Fed's minutes indicated that private markets had anticipated dollar weakness, but the Treasury's intervention may have accelerated the yen's appreciation according to analysis.
The dollar's trajectory remains a focal point for investors, with conflicting signals from the Treasury's rhetoric and the Fed's actions. While Bessent emphasized long-term dollar strength, the January rate check underscores the administration's willingness to use indirect tools to shape currency markets in pursuit of trade objectives.
