US and Japan Unite Against Yen Weakness

The U.S. and Japan have jointly intervened in foreign exchange markets to support the yen, in a rare coordinated effort.

This move comes after concerns about U.S. government-bond markets and the soundness of Japan's financial system led analysts to speculate that Washington wanted to avoid a situation where Tokyo felt forced to offload a large chunk of its Treasurys to finance a solo intervention.

According to Louise Loo, who leads Asia economics at Oxford Economics, 'there is a self-preservation element here' and volatile markets driven by potentially fiscally-aggressive policies from Japan could extend to U.S. Treasury markets, destabilizing the dollar.

The operation aims to make the yen stronger, but some analysts have doubts about its effectiveness. Robin Brooks, a Brookings Institution senior fellow, raised concerns about the mechanics of the intervention, saying 'the very odd news that the US sold Euros to buy Yen' may undercut its impact.