Japan and US Unite to Support Yen in Massive Currency Intervention

The Japanese yen has strengthened against major and minor currencies after a coordinated intervention by Japan and the US. The yen-buying operation was aimed at halting its sharp decline, which had pushed it to its weakest level in nearly 40 years. Japan's Ministry of Finance confirmed that it had carried out the intervention with the US, buying yen and selling dollars.

According to Bank of Japan data, Tokyo likely purchased an estimated $59 billion worth of yen on Thursday, making it one of the largest currency support operations in Japan's history. The coordinated action by Japan and the US has been seen as a sign of their shared commitment to maintaining currency market stability.

Naomi Muguruma, Chief Bond Strategist at Mitsubishi UFJ Morgan Stanley Securities, believes that the intervention strengthens the position of the more hawkish members within the Bank of Japan, reinforcing expectations of further monetary policy tightening. Markets now price in a 90% probability of a 25 basis point interest rate increase by the Bank of Japan in September.

US President Donald Trump said on Sunday that the US is helping Japan support the yen as a sign of friendship and to promote global economic stability. The coordinated intervention has been seen as an extraordinary move, but it may be necessary to curb speculative pressures that had pushed the yen's value down.