US and Japan Jointly Intervene in Foreign Exchange Market
The US and Japan have confirmed they jointly intervened to halt the yen's slide against the dollar, using the Federal Reserve's FIMA repo facility to secure liquidity. The intervention helped strengthen the yen to the 155-157 per dollar range.
Markets had been pricing in a Bank of Japan rate hike in September after the joint action, sending Japan's two-year government bond yield to its highest level since 1995.
Analysts said the US-Japan intervention aimed to prevent Japanese sales of US Treasuries and ease pressure for higher bond yields. However, they warned that repeated intervention alone will not resolve structural yen weakness without tighter monetary policy.
The coordinated intervention was the first joint move since 2011, when authorities acted together to weaken the yen after the Great East Japan Earthquake.