The U.S. administration has successively introduced measures to address yen depreciation and rising interest rates, but both are said to have had limited effects in stabilizing markets. In addition to yen-buying intervention and an expanded allocation for long-term Treasury buybacks, efforts to contain spillovers into the bond market are continuing.
The U.S. administration implemented market-stabilization measures, including coordinated Japan-U.S. intervention, to curb yen depreciation and rising long-term Treasury yields. In late July, it conducted yen-buying intervention jointly with Japan, and this month it more than doubled the allocation for long-term Treasury buybacks. These measures were intended to strengthen the yen and stabilize interest rates, but views are spreading that their effects have not lasted.
In the foreign exchange market, the yen briefly breached ¥160 per dollar on the 28th. Although the yen strengthened to the ¥155 range temporarily after the intervention, more than half of that gain has already been erased. Treasury Secretary Bessent expressed concern, saying, “Disorderly movements in the yen could destabilize global markets.”
The U.S. Treasury announced a decision to increase the amount of long-term Treasury buybacks. U.S. yields fell temporarily as a result, but turned higher again shortly afterward. Many in the market believe that the intervention's effect will be temporary unless the underlying conditions of large fiscal deficits, high inflation and the Japan-U.S. interest-rate differential change.
Secretary Bessent indicated a willingness to conduct additional foreign-exchange intervention, and attention is focused on the administration's future policy as the G20 Finance Ministers and Central Bank Governors Meeting approaches. He has also referred to a meeting with the Bank of Japan governor, making remedies for yen depreciation and higher interest rates a focus of the market.