Japan and South Korea Unite to Stabilize Yen and Won Against USD

A rare joint intervention by Japan and South Korea has shaken up the yen and won currencies. The move, which took place on July 30, was a coordinated effort to stabilize their respective exchange rates against the US dollar.

The Japanese and South Korean authorities bought their own currencies in the open market, with the yen strengthening from its lows around 40-year lows. The intervention lifted the yen above 157.8 per US dollar and helped push the won up by 2% to its highest level in nine months.

The move has been described as a rare joint effort between Japan and South Korea, with analysts suggesting that it may have been coordinated with the United States. Lee Min-hyuk, an analyst at KB Kookmin Bank, noted that the interests of each country aligned, and that a joint intervention could double the impact.

The central bank in Japan kept interest rates steady at 1% on July 31, but the focus will be on the comments from the bank regarding its readiness to continue pushing up borrowing costs. The Ministry of Finance remains uncomfortable with excessive yen weakness, according to Masahiko Loo, senior fixed income strategist at State Street Investment Management.