US and Japan Join Forces to Support Yen Amid Iran War Pressures

The US and Japan have jointly intervened in the foreign exchange market to support the yen, which has been under pressure due to the ongoing Iran war. The intervention, which took place on July 31, helped the currency gain around 5% against the dollar, but it has since fallen back to its previous levels.

According to an economics professor at Keio University's Faculty of Policy Management, Sayuri Shirai, Washington's participation in the intervention sent a stronger signal that the yen is substantially undervalued. This was particularly significant because US participation in currency interventions has been uncommon since the mid-1990s.

The Iran war has intensified pressure on Japan's economy due to its high energy dependence and reliance on imports from the Middle East. The conflict has led to higher oil prices, disrupted shipping, and increased demand for dollars to pay for these imports, making a weaker yen even more problematic for Japan.