Yen Soars as Japan and US Conduct Joint Intervention

The Japanese yen surged on Monday after Tokyo confirmed a joint currency intervention with Washington to stabilize its value, which had been at four-decade lows. The currency leapt as much as 1.4% in Asian morning trade, reaching 155.20 per US dollar, a level last seen on May 6.

The sudden strength of the yen weighed heavily on Japanese stocks, with the Nikkei plummeting by up to 2.6% and the Topix falling by 3.1%. Automakers were particularly hard hit, dropping by 4.2%, with Toyota slumping by 4.6%.

Japanese government bonds also declined, sending yields higher, as some investors took joint intervention as a signal for an accelerated pace of Bank of Japan policy tightening. US Treasury Secretary Scott Bessent said Washington 'will not hesitate to participate in further joint intervention,' while repeating calls for further interest rate hikes from Japan's central bank.

Rinto Maruyama, senior strategist of FX and rates at SMBC Nikko Securities, noted that the yen has been under pressure for years due to the BOJ's gradual approach to monetary policy tightening. Bessent's comments 'arguably carry more weight than the intervention itself,' said Matt Simpson, senior market analyst at StoneX.