Forex
Yen Stalemate: US and Japan Diverge on Rate Hikes
The US and Japan agree that the yen should be stronger, but they differ on how to achieve it. The US wants a more rapid and sustained strengthening of the yen, while Japan prefers lower interest rates to boost its economy.
A joint intervention by the two countries in July pushed the yen from ¥164 to the dollar down to ¥156.15, but since then, around half of those gains have been undone. The yen is now set to re-test the ¥160 'red line' that was breached in March.
US Treasury Sec. Scott Bessent, who has experience with Asian currencies during the 1997-98 financial crisis, is urging Japan to sustain the intervention effect and raise interest rates to combat inflation.