US and Japan Unite to Stem Yen's Slide

The US and Japan have jointly intervened in the foreign exchange market to stabilize the Japanese yen, which has reached a 40-year low. On July 31, the two countries' authorities bought yen to curb its excessive weakness.

Japanese Finance Minister Satsuki Katayama stated that the joint intervention 'addressed recent excessive volatility and disorderly movements in the yen.'

The exchange rate approached 164 yen per dollar last month, pushing the value of the yen to a roughly 40-year low. This is the first time in 15 years that the US and Japan have jointly intervened in the foreign exchange market.

Analysts suggest that the US decision to take joint action with Japan was driven by growing concerns that inflation worries caused by the weak yen could lead to continued interest rate hikes, which might eventually spill over into US financial markets.