US and Japan take action to prop up yen in rare joint move

Japan and the United States cooperated last week to stabilize the yen after it plummeted to a 40-year low. This joint intervention, the first since 2011, comes as both nations strive to prevent the yen's decline and Japanese government bonds from negatively impacting the global economy. The Bank of Japan reportedly sold nearly $59 billion of US dollars to buy yen during its intervention in New York markets on Thursday, followed by the confirmed joint effort with Washington on Friday.

Shigeto Nagai, head of Japan economics at Oxford Economics, explained that the US joined the coordinated intervention to benefit its national interests, as it could lead to significant advantages at a minimal cost. The two countries are anticipated to engage in intermittent joint interventions for an extended period, according to Nagai.

The yen has been weak primarily due to Japan's lower central bank interest rates compared to other major economies, such as the US. This makes the Japanese currency less appealing to international investors. Despite the intervention, the yen remains historically weak, attributed to Japan's lower interest rates and the country's reliance on energy imports priced in US dollars.

Japan's Ministry of Finance and US Treasury Secretary Scott Bessent have expressed their willingness to conduct more joint interventions in the future. The coordinated foreign exchange actions aimed to counter excessive volatility and disorderly movements in the Japanese yen, officials stated. US President Donald Trump acknowledged Japan's need for assistance and emphasized that the US is always ready to support Japan.