The message beneath the yen intervention
The U.S. and Japanese governments have acted together to try to prop up the value of the yen on global currency markets. The way they did it contains a clue about U.S. goals — and has some worrying implications for global markets. The big picture: Headline indicators have been steady across global financial markets this summer. Yet there are some signs of strains beneath the surface, particularly…
The U.S. and Japanese governments have joined forces to stabilize the value of the yen on global currency markets. This intervention, which has some concerning implications for global markets, involved complementary tools from both nations. The New York Fed sold euros to buy yen, while the Fed's Foreign and International Monetary Authorities (FIMA) Repo Facility allowed Japanese authorities to borrow dollars against Treasury securities instead of selling those securities outright.
The aim was to strengthen the yen-euro exchange rate, preventing disorderly yen movements and potential market instability. Notably, this marks the first time in over a decade that the U.S. Treasury Department has participated in currency market intervention, signaling potential stress beneath the surface of global financial markets.
Written by urgent.news from Axios's reporting — not their text. Machine-written — it may contain errors, so check the original before relying on it.
