Japan and US Intervene to Support Yen Amid Ongoing Weakness

The Japanese yen's weakness has become a pressing concern for policymakers in both Japan and the US. The yen's slide over the past decade has driven up import prices and household living costs, fueling inflation and squeezing the profitability of domestically focused businesses.

The yen's decline accelerated in April, with the currency hitting a 40-year low on July 23. To prop up the yen, Japanese authorities spent almost $74 billion in late April, followed by another intervention with US help in late July.

The interventions aimed to strengthen the yen and prevent further declines. However, the impact of these efforts was only temporary, as the yen's underlying weakness persisted due to factors such as Japan's ultra-low interest rates, heavy debt burden, and persistent budget deficits.