US Dollar Crashes After Rare Joint Intervention with Japan

The US dollar experienced a significant drop against the Japanese yen after the Trump administration and Japan's finance minister confirmed a joint intervention in the currency market.

The greenback had previously reached highs of over 163 yen, not seen in some 40 years, but began dropping below 160 yen amid growing suspicions of government intervention.

Following the announcement, the dollar fell to around 155.20 yen before recovering to touch 156.75 yen by late Monday afternoon in Tokyo.

Louise Loo, head of Asia economics at Oxford Economics, suggested that inflation pressure in Japan may have been a key reason for Washington's involvement, adding that the US also had its own interests to protect.

Masahiko Loo, senior macro strategist at State Street, noted that the focus on the Federal Reserve's standing FIMA repo facility indicated both sides wanted to avoid forced Treasury sales.