Why Japan Is Propping up the Yen with US Help
Japan spent $53 billion in one day and the New York Federal Reserve sold euros as the yen rebounded from 40-year lows, officials said.
- Last week, the US and Japan conducted a rare joint intervention to prop up the JPY, which had slid to 40-year lows—the first such operation since the late 1990s.
- This joint intervention, the first in 28 years, occurred amid record bond yields and concerns regarding the yen carry trade unwinding. The action signals Washington's growing coordination with the Bank of Japan.
- Japanese two-year bond yields rose above 1.57% on Monday, signaling that low-interest-rate conditions may be concluding sooner than markets anticipated.
- Treasury Secretary Scott Bessent plans to meet BoJ Governor Kazuo Ueda at the G20 gathering in North Carolina at the end of August to coordinate further policy steps.
- The FIMA Repo Facility serves as a key dollar liquidity backstop for Japan, while analysts suggest ongoing yen interventions could inadvertently bolster Bitcoin and broader risk assets.
13 Articles
13 Articles
The United States and Japan have carried out coordinated intervention for the first time in 28 years to defend the value of the yen and minimize the impact of the unwinding of yen carry trades. The United States is seeking to stabilize the value of the yen together with Japan, wary of a rapid outflow of capital due to concerns over rising domestic bond yields and the burden of real estate loans.
The US government helps Tokyo and intervenes in favor of the Japanese currency. At the same time, the US President is trying to solve three of his own problems.
The US is helping Japan to support the currency, because the Asian country has a million-dollar leverage that makes the American government nervous.
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