US Treasury Joins Tokyo in Yen Intervention Effort

Washington and Tokyo have coordinated to support the yen, which had hit a record low. The intervention effort has given the currency an initial boost, but analysts remain skeptical about its long-term impact.

UBS strategists Teck Leng Tan and Dominic Schnider said Japan's policy mix is unlikely to generate sustained yen strength. They pointed out that with the Bank of Japan expected to continue gradual policy normalization and real rates remaining negative, the yen should continue to be supported more by intervention risk than by domestic monetary fundamentals.

HSBC also warned that a sustained yen rebound would need a more fundamental policy shift in Japan. The dollar's reaction to the intervention was underwhelming, according to ING's head of markets Chris Turner, who attributed it to the unresolved issue of whether the Federal Reserve will hike interest rates in September.