Treasury Joins BoJ in Defending Yen Against Record Lows

The US Treasury Department has joined forces with the Bank of Japan (BoJ) to defend the yen, effectively creating a hard ceiling for its value. This intervention is unprecedented and normalizes the use of emergency measures in non-emergency situations.

According to reports, the Treasury sold euro reserves to buy yen, rather than using dollars, which keeps the dollar out of the trade entirely. The BoJ contributed around $36 billion to the effort, while the Treasury added a further $37 billion to defend the currency against 40-year lows near 164.

The move has significant implications for foreign exchange-traded funds (ETFs), with analysts advising investors to opt for hedged versions of these investments. Tomohiro Ohsumi/Getty Images News