00:00Just as global markets were getting comfortable with a strong dollar, a quiet but powerful
00:25signal has started flashing from Washington. For the first time in more than two decades,
00:32the United States may be preparing to step directly into the currency markets. And the
00:37target is the dollar-yen pair. According to recent reports, the U.S. Federal Reserve,
00:44acting on behalf of the Treasury Department, is preparing for a possible foreign exchange
00:50intervention. The plan is simple, but the implications are huge. Sell U.S. dollars and
00:57buy Japanese yen. If this happens, it would mark the first U.S.-led currency intervention
01:04since the year 2000, when major economies stepped in to support the euro.
01:10So why are markets paying attention right now? Because the New York Fed has already started
01:16what are called rate checks on the dollar-yen pair. These are informal calls to major banks,
01:23asking a simple question, where is the market trading? Historically, these checks are a warning
01:29shot, a way to signal intent without firing the first bullet.
01:34The big problem here is the yen. The dollar has been pushing toward and in some moments
01:40above the 160 level against the yen. That level matters. Because every time we've seen it in
01:47the past, Japan has felt forced to intervene. The core reason? Interest rates. The Fed is still
01:54holding rates around 4.5% to 5.5%, while the Bank of Japan remains near zero. This gap has supercharged
02:03what's called the carry trade. Borrow cheap yen, invest in high-yield dollar assets, and in the
02:10process, keep pressuring the yen lower. A weak yen doesn't just hurt Japan. It pushes up imported
02:19inflation, distorts global trade flows, and risks political backlash from trading partners.
02:25That's why coordination matters. Japan has intervened alone before, spending trillions of yen, with only
02:33temporary results. U.S. involvement changes the game. History shows coordinated action hits harder and
02:41lasts longer. If the U.S. does step in, here's what markets are watching. Selling dollars and buying yen would
02:50immediately weaken the dollar against the yen, potentially by 3 to 5% in the short term. And that has a ripple
02:58effects. A softer dollar tends to boost gold in commodities, U.S. in global equities, and emerging
03:05markets. We've already seen gold surge to record levels as these talks have gained traction. Japanese
03:12stocks could face short-term pressure. A stronger yen hurts exporters. But globally, risk sentiment could
03:20improve. Politics. Trump versus Powell, this also plugs directly into Donald Trump's long-running war
03:28with Fed Chair Jerem Powell. Trump has always favored a weaker dollar, arguing it makes U.S. trade more
03:35competitive. And while Forex policy comes from the Treasury, the Fed executes it. With Powell's terms set to
03:43expire in 2026 and tensions already high over Fed independence, any market volatility from this move
03:50could quickly turn political. If assets rally, Trump may claim victory. If markets whipsaw, expect the Fed
03:59to take the blame. For now, no dollars have been sold, no yen bought. Yet. But the signal is clear. The U.S.
04:09is watching the yen. The market is on notice. And if this line is crossed, we could be about to see a return
04:17of currency warfare in the global financial system.
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