Japan and US intervene to support yen, but fundamental issues persist | PiQ Markets
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Japan and US intervene to support yen, but fundamental issues persist
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IN SHORT
Japan and the United States have intervened to support the yen, marking the first coordinated action in 28 years. This move involved a record single-day operation in April, with Japan selling approximately $40 billion to stem the yen's slide. While the intervention temporarily stabilized the currency, experts suggest it only addresses immediate pressures and does not resolve the yen's fundamental weaknesses. U.S. Treasury Secretary Scott Bessent's support for the intervention was reportedly conditional.
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Key Numbers
28 yearstime since last coordinated yen intervention
$40 billionamount sold in April yen intervention
6.28 trillion yenamount involved in April 30 intervention
Who's Involved
Japan
country intervening to support its currency
United States
country intervening to support the yen
Scott Bessent
U.S. Treasury Secretary supporting yen intervention
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Key facts
Japan and the United States conducted a coordinated yen-buying intervention.
This is the first coordinated yen-buying intervention in 28 years.
The intervention aims to prevent broader financial market disruption.
Japanese authorities conducted a record single-day yen-buying intervention in April.
Japan sold approximately $40 billion to stem the yen's slide.
The largest operation on April 30 involved 6.28 trillion yen.
The yen temporarily strengthened after the intervention but resumed its decline.
U.S. Treasury Secretary Scott Bessent's support for the intervention was conditional.
The yen stabilized after intervention, but underlying issues remain.
Japan and the United States have undertaken a coordinated yen-buying intervention, the first such action in 28 years, to counter the currency's historic lows. This intervention aims to prevent wider financial market disruption. However, experts believe this measure is a temporary fix that does not address the underlying weaknesses contributing to the yen's decline.
In April, Japanese authorities conducted a record single-day yen-buying intervention, selling approximately $40 billion to halt the yen's slide. The largest operation occurred on April 30, involving 6.28 trillion yen. This intervention temporarily strengthened the currency, but it resumed its decline shortly thereafter. The yen has since stabilized following these interventions, though fundamental issues persist.
U.S. Treasury Secretary Scott Bessent's support for Japan's intervention was reportedly contingent on specific conditions. The primary goal of these interventions has been to stabilize the Japanese currency amidst significant fluctuations in its value. The market focus this week also included tech earnings and oil prices, with SpaceX and AMD shares falling despite revenue beats, and crude prices decreasing due to the prospect of a U.S.-Iran deal.
↳ Why This Matters
Japan and the United States have undertaken a coordinated yen-buying intervention, the first such action in 28 years, to counter the currency's historic lows. This intervention aims to prevent wider financial market disruption. However, experts believe this measure is a temporary fix that does not address the underlying weaknesses contributing to the yen's decline.
Frequently asked questions
The intervention was a coordinated effort to support the yen from historic lows and prevent excessive depreciation that could disrupt global financial markets and Asian currencies.
The previous coordinated yen-buying intervention took place during the Asian financial crisis, and the last joint action to sell yen was after the 2011 Tohoku earthquake.
Key issues include Japan's expansionary fiscal policy, concerns about fiscal health, the Bank of Japan's perceived lag in interest rate hikes, and persistent dollar demand from Japanese companies due to high energy prices.
Toyota Motor revised its assumed exchange rate for the fiscal year ending March 2027 from 150 yen to 160 yen per dollar, indicating an expectation of a weaker yen.
What Happens Next
01Markets will closely watch the Bank of Japan's policy meeting in September.
02Further U.S. government actions to address yen weakness are anticipated.
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