Japanese Yen: Intervention seen as containment – ING

ING’s Chris Turner discusses the rare joint US-Japan FX intervention, where the US Federal Reserve and Japan used the FIMA repo facility to raise dollars against Treasuries. Turner argues that the intervention does not alter the fundamentals of the Fed’s near-hiking policy versus Japan’s loose monetary policies, and doubts that USD/JPY can sustainably fall below 155.

The primary role of this intervention appears to be capping moves toward 160. The US Dollar's recent volatility is attributed to a weak yen undermining Japanese Government Bonds (JGBs), which in turn is affecting Treasuries. Japan has hinted at utilizing the Fed's new FIMA repo facility, which allows it to raise dollars against Treasury holdings rather than selling Treasuries outright.

This intervention serves as a containment measure, limiting investors from chasing USD/JPY above 160 and providing time for Tokyo to implement more yen-positive policies. This article, partly generated by an AI tool and reviewed by a human editor, highlights the significance of this bilateral intervention between Washington and Tokyo.