US and Japan Team Up to Support Yen Amid Global Energy Crisis

The United States joined Japan in a coordinated effort to support the yen's value on July 31, after it had reached its weakest level against the dollar in approximately four decades. The intervention helped lift the currency by around 5%, but it soon fell back, surrendering roughly half of that advance.

Sayuri Shirai, an economics professor at Keio University, noted that coordinated intervention is more effective than unilateral Japanese action because US participation sends a stronger signal that the yen is undervalued.

The underlying interest-rate differential has driven the yen's weakness, with high US interest rates attracting foreign investors and pushing down the value of the yen. The war in Iran accelerated this trend, as Japan became increasingly exposed to higher energy costs and disrupted shipping due to its reliance on Middle Eastern oil imports.