Japan and the United States have conducted a joint intervention to support the yen, signaling readiness for further action to curb the currency's decline.
Key facts
- •Japan may have spent up to US$36.58 billion on the joint intervention conducted on Friday.
- •The yen reached a 40-year low of near 164 per dollar last month before the coordinated action.
- •This is the first joint Japan-US currency intervention since 2011.
- •The two-year Japanese government bond yield reached 1.545 per cent on Monday, the highest level since 1995.
- •Tokyo previously conducted a solo intervention worth up to US$58.97 billion in New York markets.
Japan and the United States conducted a coordinated yen-buying intervention on Friday to halt the currency's slide to 40-year lows. Japan's finance ministry confirmed the rare bilateral action on Monday, with officials from both nations stating they would not hesitate to intervene again. The move aims to counter excessive market volatility and prevent global economic spillovers.
By the numbers
Market Impact and Official Response
Following the announcement, the yen surged more than 1 per cent to 155.20 per dollar, moving away from the 40-year low of near 164 reached last month. US Treasury Secretary Scott Bessent expressed support for Japan's steps to correct the yen's undervaluation and confirmed Washington's willingness to participate in future joint efforts. Japan's Finance Minister Satsuki Katayama stated that the government will continue to align currency policy with the Bank of Japan.
Policy and Economic Context
The intervention follows Japan's solo market actions earlier in the year and a June rate hike by the Bank of Japan, which had limited success in stabilizing the currency. Markets are now pricing in a potential interest rate hike by the Bank of Japan as early as September. Additionally, the US indicated it may increase the size of a Federal Reserve repurchase facility to provide temporary dollar liquidity to Japan, a tool intended to assist with market stability.
Timeline
- Late April to early MayJapan conducted solo currency intervention that resulted in only a brief yen rebound.
- FridayJapan and the US conducted a coordinated yen-buying intervention.
- MondayJapan's finance ministry confirmed the joint intervention and signaled readiness for further action.
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This article was independently rewritten by ManyPress editorial AI from reporting originally published by Channel NewsAsia.
