Loose Monetary Policy Keeps Yen on Downward Path Despite Intervention

The recent intervention by the US and Japan in the foreign exchange market has had little impact on the value of the yen, despite the initial hype. The fundamental drivers behind the yen's depreciation remain unchanged, with Japan continuing to maintain loose monetary policy settings.

Interest rates in Japan remain low, which continues to attract investors looking for higher returns elsewhere. This has driven demand for the US dollar and pushed up its value against the yen.

US Treasury Secretary Bessent recently weighed in on the situation, stating that easing energy prices and a stabilization of the yen may contribute to lower inflation in Japan, potentially initiating a positive economic cycle.