US and Japan Unite to Defend Yen from Historic Low

The US and Japan have joined forces to defend the yen for the first time in 28 years. The move is seen as a response to concerns that a weak yen could destabilize not only Japan's economy but also the US Treasury market and global financial markets.

The US Treasury Secretary, Scott Bessent, is believed to have driven this cooperation due to his understanding of the structure of global foreign exchange markets. He previously earned over $1 billion by betting on yen weakness in 2013 while working at a hedge fund led by George Soros.

The intervention has been swift and significant, with Japanese authorities selling dollars and buying yen, and the US Treasury conducting rate checks with multiple banks through the Federal Reserve Bank of New York. The scale of the intervention is estimated to be around $8.45 trillion yen, with some reports suggesting that the US considered buying up to $10 billion in yen.

The move has pushed the yen-dollar exchange rate down from its intraday high of 163.9 yen per dollar on March 29th. However, analysts warn that this intervention is unlikely to sustain yen strength for a long period, as it cannot change fundamental factors such as the US-Japan interest rate gap and Japan's fiscal deficit.