US and Japan Stage Joint Yen Intervention Amid Fears of Regional Instability

US Treasury Secretary Scott Bessent has revealed that the recent intervention to prop up the yen was aimed at averting broader instability in Asia, echoing concerns about the region's late-1990s financial crisis.

The joint operation with Japan last week involved buying yen for the first time since 1998 and came after the currency slumped to a four-decade low of almost 164 per dollar.

Bessent likened the situation to the Asian financial crisis, warning that an overly weak yen could trigger instability in other currencies, including the Korean won and Chinese renminbi.

Experts say the Trump administration's actions were also motivated by a desire to reduce the US trade deficit, as a weak yen helps Japanese exporters, and to help Japan invest $550 billion in the United States as promised under a 2025 trade deal.

The intervention has had a temporary impact on the yen, with it trading around 4% higher than last month's low, but analysts are skeptical that it will lead to more significant policy changes in Japan.