US and Japan Unite to Save Weakened Yen

The US and Japan recently coordinated a rare joint intervention to stabilize the Japanese Yen's alarming fall. The operation, confirmed by both governments over the weekend, was described as a 'sign of friendship' towards a key ally.

The Federal Reserve Bank of New York sold euros to purchase yen on the US Treasury's behalf, with the note from Treasury Secretary Scott Bessent reading simply: 'Buy Japanese Yen (JPY) $5-10 bil.'

The intervention was born of necessity rather than choice. The yen had crashed to more than 163 per dollar, its weakest showing since the early 1980s, due in part to a yawning gap between American and Japanese interest rates.

Geopolitics also added to Japan's difficulties, with global oil and gas prices higher due to the Iran war. This squeezed Japan from two directions at once: paying more for fuel and needing ever more of its depreciating currency to buy dollars required to purchase it.