US Intervenes in Foreign Exchange Market to Support Weakened Japanese Yen

The US has intervened in the foreign exchange market for the first time in over a decade to support the Japanese yen. The move, coordinated with Japanese authorities, aimed to stem the currency's decline against the dollar. On July 31, the US Treasury began selling euros to buy yen, while the Japanese government made massive purchases of its own currency.

The operation was prompted by the yen hitting a 40-year low against the dollar in July, sparking concerns about global financial stability. The intervention was seen as a demonstration of the US commitment to supporting its ally in Asia and protecting the US economy from the fallout of a weak Japanese currency.

US Treasury Secretary Scott Bessent vowed that Washington would 'do whatever it takes' to help stabilize the yen, which has been affected by Japan's anaemic growth, low inflation, and interest rates near zero. The intervention was also seen as a signal to the Bank of Japan to continue normalizing its monetary policy.