US, Japan Intervene to Boost Weakening Yen Amid Public Finance Concerns

The US and Japan have intervened to support the weakening yen for the first time since 1998. The Japanese currency has fallen to around ¥163 against the US dollar, its lowest level in nearly four decades.

The intervention was prompted by concerns over Japan's public finances and the recent sales tax cut on food and drinks, which increased investor worries about the country's fiscal situation.

The interest-rate gap between Japan and the US has also contributed to the yen's decline. The Bank of Japan has kept borrowing costs low, while the US has maintained relatively high interest rates, making dollar-denominated assets more attractive to investors.

This has led to a surge in demand for the dollar, putting pressure on the yen. Investors have been encouraged to engage in the 'carry trade,' borrowing money in low-interest-rate Japan and investing it in countries offering higher returns, such as the US.