Japanese Finance Minister Satsuki Katayama is set to announce that Tokyo and Washington have taken joint action to support the yen, which has recently hit 40-year lows against the dollar. This intervention follows rounds of yen-buying by both governments, marking the first joint effort since 2011.
Reports indicate that Japan's Ministry of Finance may have sold as much as $58.97 billion to bolster the yen during New York trading hours. The yen's decline has been exacerbated by a widening interest rate differential between Japan and the U.S., where the Federal Reserve has adopted a more hawkish stance.
Following the Bank of Japan's decision to maintain its monetary policy, the yen experienced a spike, suggesting further intervention may have occurred. Treasury Secretary Scott Bessent has expressed concerns about the yen's undervaluation and has indicated that the U.S. may also intervene if necessary.
Additionally, Japan's Ministry of Finance has communicated its readiness to utilize a range of tools to address market liquidity, including access to the Fed's repurchase facility. However, analysts warn that continued yen-buying could strain Japan's Treasury holdings and lead to a selloff in U.S. debt, potentially increasing U.S. yields.
The cooperation between the U.S. and Japan is seen as a response to shared inflation risks and the need to maintain market trust in Japan's fiscal sustainability