US and Japan Unite on Yen Intervention

A joint intervention by the US and Japan to stabilize the yen has provided a temporary boost to their trade relations, but it remains to be seen whether this goodwill will last.

The rare operation saw Washington buy yen for the first time since 1998 in an effort to prevent a further decline in its value. The Japanese currency had slumped to a four-decade low of almost 164 yen to the US dollar before the intervention.

The move lifted the yen to a three-month high of 155.2 on Friday, but it has since weakened. As of noon on Wednesday, the yen stood at 157.44. US President Donald Trump announced that his administration had bought the yen to help Japan, signaling a more positive turn in relations after months of aggressive negotiations with Tokyo over a trade deficit that reached $63.9 billion last year.

Matthew Ryan, head of market strategy at Ebury, said 'This rare joint intervention looks set to strengthen US-Japan relations.' He noted that the interests of both countries appear to be aligned for now, with Washington keen to prevent a widening trade deficit and Tokyo focused on preventing a slide in the yen that could stoke inflation and rattle the bond market.