Yen Crisis Deepens Despite US Intervention

Japan's currency crisis has deepened despite a US intervention to stabilize the yen. In July, the Japanese yen hit a 40-year low due to low interest rates and uncertainty surrounding the Iran war. The US responded by purchasing yen for the first time in 30 years, which initially led to a slight rally.

However, the gains were short-lived as the yen's value fell back by 1% on Monday, wiping out half of the gains made since the intervention. This has sparked concerns that further government action may be necessary to stabilize the currency.

US Treasury Secretary Scott Bessent had promised to do 'whatever it takes' to help stabilize Japan's currency, but the true extent of the US package remains unclear. A cryptic note left by Bessent at a meeting at Camp David suggested that the US intended to buy between $5-10 billion in yen.

Japanese Prime Minister Sanae Takaichi has called for partial repatriation of Japan's vast overseas holdings, including $1 trillion in US securities. An interest rate rise by the Bank of Japan may be necessary to achieve this goal and stabilize the currency.