The US and Japan carried out coordinated intervention to buy yen in the market on 31 July, sending the yen sharply higher from the ¥163 range to the ¥155 range per US dollar. This was the first coordinated intervention since 2011, and the first in 15 years, putting markets in a position where the future direction of monetary policy in Japan, the US and Europe needs to be assessed.
The governments of Japan and the US carried out coordinated intervention to buy yen in the foreign exchange market on 31 July. The yen rose sharply against the US dollar from around ¥164 to the ¥155 range, moving to avoid levels of weakness not seen for approximately 40 years. The intervention was coordinated between Japan and the US and was the first in 15 years.
The intervention reflects a desire to correct the disadvantages of excessive yen depreciation. Officials outside the US have expressed the view that a strong dollar is detrimental to Japan’s exports, and have justified the intervention on the grounds that yen depreciation could trigger selling of US Treasuries and higher interest rates. Treasury Secretary Bessent has also reportedly made remarks pointing to delays in the Bank of Japan’s policy response.
Going forward, the future course of monetary policy in Japan, the US and Europe will need to be assessed over a period of roughly three months. Attention is focused on the Federal Reserve’s actions, and some observers believe that remarks at the Jackson Hole meeting could affect the market.
Some observers have said that the impact on the market was relatively limited. Large moves in the equity market remained limited after the foreign exchange intervention, while individual stocks are believed to have moved amid a combination of earnings results and supply-and-demand factors.