Japanese and American authorities have confirmed a joint effort to support the yen following its recent drop to a 40-year low. This move marks the first time the two nations have coordinated currency intervention since 2011, when they acted to weaken the yen in the aftermath of the earthquake and tsunami in Japan.
The intervention aims to mitigate the impact of a yen sell-off on the global economy and prevent rising borrowing costs for the United States. While the US Treasury has not disclosed the specific scale of its involvement, a photograph captured during a cabinet meeting showed a note referencing a potential $5-10 billion purchase of Japanese yen. Bank of Japan data suggests Tokyo independently sold approximately $59 billion in US dollars to purchase yen during market activity on Thursday.
The yen’s weakness is largely attributed to a significant interest rate gap between the two nations. The Bank of Japan’s main rate sits at 1%, while the US Federal Reserve maintains a benchmark range between 3.50% and 3.75%. Japan also faces structural economic challenges, including a shrinking workforce and a high dependence on energy imports priced in US dollars.
US Treasury Secretary Scott Bessent stated that the coordinated actions were intended to address "disorderly yen movements" and "substantial undervaluation." President Donald Trump confirmed the US support, noting that the administration is "always there for Japan." Experts suggest that even if the financial volume of these interventions remains modest, the ongoing threat of further action serves as a deterrent against currency speculators.
Both the Japanese Ministry of Finance and the US Treasury have indicated that they remain prepared to conduct additional joint interventions if market volatility persists.
Source: BBC News
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