US, Japan intervene jointly to support yen

Japan and the United States have joined forces to intervene in the currency market, taking joint action to support the yen. This marks their first coordinated intervention in 28 years, following a currency that hit a low not seen in four decades. The cause of the yen's decline is primarily attributed to the disparity between Japanese and US interest rates, which has fueled the "carry trade" among investors, as well as concerns over Japan's massive debts under new Prime Minister Sanae Takaichi.

The last time the US and Japan collaborated on such an intervention was in 2011, following a major earthquake. The most recent joint action occurred in 1998 under then-U.S. President George W. Bush. President Donald Trump confirmed the coordinated action aboard Air Force One, describing it as a "signal of friendship" with Japan and a "good thing for the world economy."

Treasury Secretary Scott Bessent stated that the United States strongly backs Japan's efforts to correct the yen's undervaluation. The intervention aimed to counter excessive volatility in the Japanese yen and stabilize the market. Following the intervention, the yen briefly touched 155.23 against the dollar on Monday, prompting speculation of further coordinated actions.

Japan's Finance Minister Satsuki Katayama highlighted that Tokyo had received high praise for revitalizing the economy through its monetary policies. However, a weak yen poses challenges for Japan, as it inflates import costs, including oil, which is particularly problematic given the country's reliance on imports. The Bank of Japan recently raised interest rates to a 31-year high of 1.0%, but remains significantly below the US Federal Reserve's range of 3.50-3.75%.