US Treasury and BoJ Trigger Rare Yen Intervention

The recent yen rescue operation was triggered by a handwritten to-do list on Treasury Secretary Scott Bessent's desk, instructing him to 'Buy Japanese Yen (JPY) $5-10 bil.'

This rare intervention is not the first time Japan and the US have intervened in foreign exchange markets. The last time occurred in 1998 during the Asian Financial Crisis when the yen had depreciated sharply against the dollar.

The action taken by the U.S. government was intended to prevent disorderly depreciation and reduce the risk of broader financial spillovers. If the US did not take decisive action, Japan could have possibly liquidated a large sum of US treasuries to raise emergency cash, causing treasury prices in the US to fall and yields to rise.

The intervention also served as a strategic signal of multi-faceted support to one of the US' strategic military anchors in the region. The BoJ sold an estimated $58.97 billion USD to buy yen, while the U.S. Treasury sold euros to purchase $5-10 billion worth of yen in coordination with the BoJ.