US Dollar Weakens Sharply Against Yen After Joint Market Intervention

The US dollar weakened sharply against the Japanese yen after market interventions by both countries. The intervention was confirmed by US President Donald Trump and Japan's Finance Minister Satsuki Katayama, who said their governments had purchased yen in coordination with each other.

Before late last week, the dollar was trading at 163 yen, but after regulators were suspected of stepping in, it fell below 160 yen. The latest intervention appears to have a more durable impact than earlier cases this year, and the yen may have a slightly stronger path for the rest of the year, according to Shigeto Nagai, head of Japan economics for Oxford Economics.

The US dollar's weakness is partly due to the big gap between interest rates in the US and Japan, which has led investors to sell yen and buy dollars to take advantage of the higher yields from dollar-denominated assets. The intervention was seen as a rare move by both countries, with Neil Newman, managing director and head of strategy at Astris Advisory Japan, saying it's not often that governments intervene in this way.