Japan and US Unite Against Yen's Slide
Japan's Finance Minister Satsuki Katayama is set to announce joint action between Tokyo and Washington to combat the yen's slide. According to two Japanese government officials, the operation has been ongoing with both countries buying yen for dollars in the market.
The intervention comes after the yen hit a 40-year low against the dollar. Market sources reported that the Japanese authorities bought yen for dollars in New York trading hours last Thursday, with data suggesting they sold as much as $58.97 billion to support the yen.
Tokyo's move was preceded by a statement from the Bank of Japan (BoJ) governor Kazuo Ueda, who signalled a strong chance that interest rates would be raised soon. This widening rate differential with the US, where the Federal Reserve has shifted to a more hawkish stance, contributed to the dollar's rise against the yen.
The joint action between Tokyo and Washington marks the first joint intervention since 2011. The US Treasury Department informed banks that they might intervene in the yen market and should 'stand ready for future action', with Treasury Secretary Scott Bessent stating that the yen 'seems very undervalued to me'. Japan's Economy Minister Minoru Kiuchi also emphasized the importance of maintaining market trust in the country's fiscal sustainability.