US and Japan Intervene in Foreign Exchange Market to Save Yen

The US Treasury and the Bank of Japan have intervened in the foreign exchange market for the first time in 15 years to support the Japanese yen, which had fallen to its lowest level since 1986 against the US dollar.

The joint operation involved the New York Fed buying euros with dollars to purchase yen, while the Bank of Japan bought a record $53.3 billion in yen on a single day.

This move is aimed at preventing a scenario where the Japanese central bank would have to dump large quantities of US treasuries to finance interventions, which could lead to market instability.

Japan is the largest holder of US government debt, with holdings exceeding $1.14 trillion as of May this year.