US and Japan Stage Historic Joint Intervention to Stabilize Yen

The US and Japan have executed their first joint currency intervention since 2011 to stabilize the yen. Tokyo sold nearly $60 billion in foreign reserves to artificially boost demand for the yen, while Washington committed up to $10 billion to backstop the effort.

The decision reflects deep structural concerns about the Japanese economy, which has been under pressure due to an earthquake and delayed interest rate hikes by the Bank of Japan. The yen had been plummeting against the US dollar, exacerbating costs for imported energy and raw materials.

The activation of a dedicated Fed Repo facility allowed Japan to use its vast holdings of US Treasuries as collateral to secure dollar liquidity without dumping bonds on the open market. This move prevented a potential spike in US bond yields and borrowing costs across the American economy.