US and Japan Team Up to Boost Yen in Rare Currency Intervention

The US and Japan have intervened in the global currency market for the first time since 1998, teaming up to push the yen higher.

This move is designed to stem a situation that was getting out of hand, where the yen had fallen to its lowest level in 40 years against the US dollar.

The widening gap between the Federal Reserve and the Bank of Japan has been the main culprit behind this decline, as higher US rates make dollar-denominated assets more attractive to global investors.

This interest-rate differential has fueled the carry trade, where investors borrow cheap yen to invest in higher-yielding assets elsewhere, further pressuring the Japanese currency.