Japan-South Korea Joint Intervention Lifts Yen, Tightens Coupled Markets

A rare joint market intervention by Japanese and South Korean authorities has shaken up both the yen and the won. On Thursday, July 30, the two countries' financial regulators coordinated a move to buy their respective currencies in the open market.

The intervention was described as 'rare and unprecedented' and may have been done in conjunction with US authorities. The move lifted the yen away from its 40-year lows but traders were back testing Tokyo's resolve on Friday, July 31, after the Bank of Japan kept interest rates steady.

Lee Min-hyuk, an analyst at KB Kookmin Bank, said that 'the interests of each country aligned' and that a joint intervention could double the impact due to the currencies being 'tightly coupled'. He added that from the US perspective, Korea and Japan need to invest in America.

The yen was last trading at 160.64 per US dollar, down 0.7% on the day after strengthening to as much as 157.8 in the previous session.