Washington and Tokyo Unite to Support the Yen Amidst Historic Loss
The sharp depreciation of the Japanese yen has prompted a joint intervention by Tokyo and Washington to curb speculative selling and reduce excessive volatility in the foreign exchange market.
The dollar-yen exchange rate reached an intraday high of 160.89 on July 31, but fell to 157.58 after the joint intervention. The yen's value had been under pressure due to a wide interest-rate gap between Japan and the US, as well as rising oil prices linked to the Middle East conflict.
The Bank of Japan raised its policy rate to 1%, the highest level in 31 years, but this move failed to provide lasting support for the currency. Japanese Finance Minister Satsuki Katayama said Tokyo and Washington purchased yen to restrain excessive volatility and disorderly market movements.