US and Japan Team Up to Defend Yen in Rare Forex Move

Tokyo and Washington have intervened in the foreign exchange market for the first time since 2011, buying yen to counter a weak currency. The joint move was made on April 30 and resulted in a brief surge of the yen against the dollar, reaching ¥157.20 per dollar, its strongest level in about 2½ months.

The US and Japan have shared concerns over a super-weak yen and strong dollar, which has been driven by persistent views that the Takaichi administration is cautious about raising interest rates and concerns over Japan's fiscal health. The intervention was based on a joint statement announced in September last year by the Japan and US finance ministers.

Takashi Kiuchi, executive economist at Nomura Research Institute, Ltd., believes that the effect of the joint intervention will be temporary, and the exchange rate may return to pre-intervention levels within the next few weeks. Tokyo and Washington are expected to make an announcement about their future policy directions, which will likely involve steps to avert a weak yen and strong dollar.