Against the backdrop of assertions that downward pressure on the yen will persist even after coordinated intervention by Japan and the United States, this article examines the root causes behind the dollar exceeding ¥164 and the effectiveness of intervention. It also summarizes the key developments, including the yen's level following the intervention on 3 August and subsequent movements.
The yen temporarily strengthened back to the ¥157-per-dollar range after Japan and US financial authorities carried out coordinated intervention on 3 August, but downward pressure on the yen remains in the market. The article describes the coordinated intervention as the ultimate form of a US-Japan currency alliance while emphasizing the importance of future action.
At a press briefing, Atsushi Mimura, Japan's Vice-Minister of Finance for International Affairs, described the coordinated intervention as the ultimate form of a US-Japan currency alliance and indicated that the authorities would continue responding to developments. He also explicitly stated that their response would be coordinated with the Bank of Japan's monetary policy.
The yen weakened to just below the ¥164-per-dollar level at the end of July, but reports indicate that its level temporarily reversed following coordinated intervention by Japan and the United States. Reports also said that coordination between the financial authorities of Japan and the United States had begun approximately 9 months earlier.
According to reports, amid discussions concerning Japan's fiscal policy, efforts are under way between the financial authorities and the country's political leadership to contain the risk of further yen depreciation and stabilize fiscal management. The effectiveness of future intervention and the continuity of coordinated action by Japan and the United States are the key issues.