U.S. Treasury says currency-market intervention should be reserved for ‘very exceptional circumstances’ in response to Japan’s September move

Now read: Yen rallies after Japan unilaterally intervenes for first time in 24 years

In its semiannual report to Congress on foreign-exchange and macroeconomic polices of the U.S.’s major trading partners, Treasury made plain that it expects a high bar for such moves.

“Treasury’s firm expectation is that in large, freely traded exchange markets, intervention should be reserved only for very exceptional circumstances with appropriate prior consultations,” the report said.

The U.S. dollar dropped sharply against the yen
USDJPY,
+0.15%
in response to the Sept. 22 intervention. The dollar briefly touched its highest level against the yen in more than 30 years in October, although dollar strength has eased a bit since.

In addition to Japan, Treasury said six other countries are on its monitoring list of major U.S. trading partners whose currency practices and economic policies warrant “close attention”: China
CNYUSD,
+1.15%,
Korea
KRWUSD,
2.31,
Germany
EURUSD,
+0.39%,
Malaysia
MYRUSD,
+1.90%,
Singapore
SGDUSD,
+0.38%
and Taiwan
TWDUSD,
+1.21%.

The report concluded that no major U.S. trading partner manipulated its currency versus the dollar for unfair trade advantages during the four quarters through June 2022.

Treasury reiterated its call for increased transparency from China. A senior Treasury official told reporters that the U.S. has not had much of a response from China about the U.S.’s call.