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Japan and US coordinated to intervene in currency markets to support yen

Created at 2 Aug · 1:13 AM1 source↑ Market-relevant
IN SHORT

Japan's Finance Minister Satsuki Katayama is expected to announce joint currency market action with Washington to counter the yen's slide to 40-year lows. The intervention, aimed at boosting the Japanese currency, marks the first such joint action since 2011.

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Key Numbers

40-yearyen's slide to lows
2011last joint intervention
$5-10 billionpotential yen purchase amount

Who's Involved

Satsuki Katayama
Japanese Finance Minister expected to announce joint action
Washington
Partner in joint currency market action
Scott Bessent
U.S. Treasury Secretary who noted yen undervaluation
Bank of Japan
Kept monetary policy steady, signalling potential rate hike
Japan and US coordinated to intervene in currency markets to support yen

↳ Why This Matters

The coordinated intervention by Japan and the U.S. signals a strong commitment to stabilizing the yen, potentially impacting global currency markets and trade dynamics. It highlights concerns over rapid currency depreciation and its economic consequences.

Key facts

  • Japan's Finance Minister Satsuki Katayama will announce joint currency market action with Washington.
  • The intervention aims to support the yen, which has fallen to 40-year lows.
  • This is the first joint intervention by the two countries since 2011.
  • Japan conducted yen-buying, dollar-selling intervention on Thursday.
  • U.S. Treasury Secretary Scott Bessent had previously noted the yen appeared undervalued and suggested a potential purchase.

    • Japan's Finance Minister Satsuki Katayama is set to announce on Monday that Tokyo and Washington have undertaken joint action in the currency market to halt the yen's significant decline. The yen has fallen to 40-year lows against the dollar, prompting this coordinated effort.

    Sources familiar with the matter indicated that Katayama would emphasize the determination of both nations to combat what they perceive as excessive depreciation of the Japanese currency. This move represents the first instance of joint intervention by Japan and the U.S. since 2011.

    Market participants reported rounds of yen-buying by Japanese and U.S. authorities, seeking to bolster the currency from its lowest levels against the dollar since 1986. A market source confirmed that Japan conducted yen-buying and dollar-selling intervention during New York trading hours on Thursday.

    This action preceded the Bank of Japan's decision on Friday to maintain its current monetary policy while signaling a strong likelihood of an imminent interest rate increase. U.S. Treasury Secretary Scott Bessent had previously commented that the yen appeared "very undervalued" and was seen with a notepad indicating a potential "Buy Japanese Yen (JPY) $5-10 bil" at a cabinet meeting.

    Furthermore, the U.S. Treasury had informed several banks on Friday about the possibility of intervention in the yen market, instructing them to be prepared for future actions.

    Frequently asked questions

    The article does not explicitly state the reasons for the yen's fall, but implies it is due to market forces leading to 40-year lows against the dollar.

    Joint intervention involves two or more countries coordinating their actions in currency markets, typically by buying or selling their own currencies, to influence exchange rates.

    The last joint intervention by Japan and the U.S. in the currency market was in 2011.

    The Bank of Japan kept its monetary policy steady but signaled a strong chance of an early interest rate hike, which could also influence the yen's value.

    What Happens Next

    01Finance Minister Katayama to formally announce joint action.
    02Market to observe ongoing intervention efforts.

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    Cadence
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    How It Developed

    Japanese Finance Minister Satsuki Katayama will announce joint action on the yen.
    The action is intended to arrest the yen's slide to 40-year lows.
    This marks the first joint intervention by Japan and the U.S. since 2011.
    Japan conducted yen-buying, dollar-selling intervention in New York hours on Thursday.
    U.S. Treasury Secretary Scott Bessent indicated a potential $5-10 billion yen purchase.
    The Treasury informed banks of potential intervention and to stand ready for future action.

    Sources

    T1
    Exclusive-Japan to announce Tokyo, Washington took joint action on yen, sources sayReuters

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