US and Japan Intervene in Currency Markets to Support Weakening Yen

The US and Japan have intervened to support the weakening yen for the first time since 1998. The yen had weakened to around ¥163 against the US dollar, its lowest level in nearly four decades.

The intervention was triggered by a wide gap between interest rates in Japan and the US. The Bank of Japan has kept borrowing costs lower, while the US has maintained relatively high interest rates, encouraging investors to move money into dollar-denominated assets.

This has increased demand for the dollar, weakening the yen further. Japanese Prime Minister Sanae Takaichi's announcement of a two-year cut in sales tax on food and soft drinks also added to investor concerns about Japan's public finances.