US says joint yen intervention aimed to prevent Asian instability
US treasury secretary Scott Bessent likens the Japanese currency’s weakness to the region’s late-1990s financial crisis.
In a historic joint intervention, the United States and Japan sought to support the yen due to concerns over its weakening impact on Asian markets, US Treasury Secretary Scott Bessent stated. The operation, which marked the first such action since 1998, occurred after the currency plummeted to nearly 164 per dollar, the lowest level in four decades.
Bessent likened the situation to the region's financial crisis in the late 1990s, emphasizing that a stable yen is crucial not only for the US but also for the entire region. He noted that an overly weak yen could trigger a chain reaction, affecting other currencies, with the Korean won already experiencing excess volatility and the Chinese renminbi being perceived as undervalued.
Bessent highlighted the importance of Japan's trade flows, economic size, and its role in the global savings market, particularly Japan's significant holding of American debt. The intervention aimed to reduce the US trade deficit, assist Japan in investing $550 billion in the United States under a 2025 trade deal, and address concerns about potential sales of US Treasuries by Japan.
Despite Japan's efforts to support the currency over months, the yen's decline was attributed to factors such as interest rate differentials, high oil prices, and concerns over the prime minister's spending plans. Washington and Tokyo have signaled readiness for further action, and the yen was trading at a four percent premium to last month's low by Wednesday.
However, experts cautioned that the intervention may provide only a temporary reprieve, emphasizing that the yen's exchange rate will ultimately be determined by global growth outlook and domestic policy changes.
Written by urgent.news from Free Malaysia Today's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
