US and Japan Jointly Intervene to Support Yen
The Japanese yen has made a significant recovery after reported joint intervention by Washington and Tokyo. This marks the first time in nearly three decades that the two nations have collaborated to support the yen, with the currency reaching its weakest level since 1986.
The Financial Times reported that the Federal Reserve Bank of New York sold euros to buy yen on behalf of the US Treasury through Goldman Sachs and Morgan Stanley. This transaction was carried out on Friday after the yen slid to 163.24 per dollar last month, prompting speculation about Japanese authorities' involvement in currency markets.
Analysts estimated that Japan's intervention may have totalled around ¥8.45 trillion (RM215 billion), while others put the amount at between ¥6 trillion and ¥7 trillion. The move is seen as a response to the wide gap between interest rates in Japan and those in the US, which has encouraged investors to engage in 'carry trades', borrowing cheaply in yen to invest in other assets with better returns.
Stephen Innes at SPI Asset Management noted that while Tokyo's involvement remains unclear, the price action suggests Japanese authorities were indeed intervening. The recovery of the yen has been attributed to a combination of factors, including higher US interest rates and rising oil prices.