Tokyo – Japanese Finance Minister Satsuki Katayama plans to announce a joint intervention by Tokyo and Washington in the currency market aimed at curbing the sharp decline of the yen. The yen has reached its lowest level in 40 years. This Japanese-American move would mark the first such joint intervention since 2011. It comes amid close coordination between the two countries to address the economic fallout and market pressures.
Details of the joint intervention and currency support
Informed sources told Reuters that the anticipated announcement will underscore both sides’ determination to combat the excessive depreciation of the Japanese yen against the dollar. Bank of Japan data indicates that authorities sold up to $58.97 billion to support the yen during New York trading. Additionally, the US Treasury Department notified several banks of the possibility of further intervention. It advised them to prepare for any future measures. Meanwhile, signs of high-level coordination have emerged, including US directives to support yen purchases of between $5 billion and $10 billion.
Monetary policy and economic challenges
The initial intervention coincided with the Bank of Japan’s decision to keep interest rates unchanged, while hinting at a possible increase soon. This occurred against a backdrop of widening federal funds spreads. Meanwhile, the Ministry of Finance resorted to alternative tools, such as the Federal Reserve’s repurchase facility, to increase dollar liquidity. They did this without directly selling US Treasury bonds. This measure aimed to prevent an undesirable rise in bond yields and alleviate shared inflationary concerns.
