Dollar Crumbles Against Yen After Joint Market Intervention
The US dollar experienced a significant drop against the Japanese yen after market interventions by both countries. Prior to the intervention, the dollar had reached 40-year highs, trading above 163 yen. However, following the announcement of coordinated action between the US and Japan, the dollar fell below 160 yen, dropping around 1% to 156.34 yen.
The yen's prolonged weakness against the dollar has been a concern for Tokyo due to its impact on inflation, as a weak currency increases prices for imported goods. Finance Minister Satsuki Katayama confirmed the intervention, stating that the finance ministry had purchased yen in coordination with the US Treasury Department to counter excessive volatility and disorderly movements in the Japanese yen.
According to Neil Newman, managing director at Astris Advisory Japan, this overt acknowledgement of market intervention is rare. He noted that such action was last seen after a massive earthquake and tsunami disaster in northeastern Japan in 2011.