US-Japan Yen Intervention Sparks Concern Over Global Market Stability

The recent yen intervention by Japan and the US has raised concerns about its potential impact on global markets. According to Robin Brooks, who is quoted in the article, currency interventions don't work.

The joint U.S.-Japan support of the yen is unusual and adds liquidity to the market, which is already overflowing. Treasury Secretary Scott Bessent wants the Fed to drop its $60 billion cap on the emergency facility being used to lend to Japan, and pledged to do 'whatever it takes' to help.

Bessent's plan involves using an emergency tool called FIMA (Foreign and International Monetary Authorities) repo facility to assist Japan. This facility allows eligible counterparties to enter overnight or up-to-7-day repurchase agreements with the Fed in exchange for dollars, without selling Treasuries on the open market.