Yen Steadies as Intervention Boost Fades; RBA in Focus
Analysts said the move was intended to curb pressure on U.S. Treasury yields as Japan’s currency fell back toward 160 per dollar.
- On Monday, Japan's currency slid as much as 1%, erasing half the gains from the first US-Japan joint intervention to prop up the yen since 1998.
- Media reports suggest the Federal Reserve 'did not stump up' for the recent intervention, limiting the Treasury to its Exchange Stabilization Fund, which holds less than $220 billion.
- Treasury official Bessent proposed using the Foreign and International Monetary Authorities Repo Facility to allow Japan to swap a portion of its $1 trillion-plus stockpile of Treasuries for dollar cash.
- If the yen trades durably above 160, markets could interpret an absence of further intervention as 'a sign of US reluctance toward selling dollars,' Marco Casiraghi and Gang Lyu at Evercore ISI wrote.
- Benchmark 10-year Treasury yields recently hit their highest since Bessent took office, while swaps show traders pricing about a 63% chance of a Bank of Japan rate increase by September.
49 Articles
49 Articles
Yen's slide to weekly loss prompts bets for another intervention
The yen headed for its biggest weekly loss in three months on Friday as the impact of U.S. and Japanese intervention faded, leaving traders to wager another round of official buying would be needed to stem the rot.
Why Japan Is Struggling to Prop Up the Yen, Even With US Help
The Japanese yen is falling again after the extraordinary joint intervention by the United States and Japan. It has already given up almost half of its gains since the peak after the intervention. Investors warn that without an interest rate increase in Japan and better coordination between major central banks, the support for the currency will only have a short-term effect.
The Japanese yen-dollar exchange rate fell to the 150 yen range due to coordination between the U.S. and Japan, but is returning to the 160 yen range after just two weeks. As of 3:30 PM on the 12th, the yen-dollar rate stood at 159.4 yen, a 1.07% increase compared to the 5th (157.7 yen), when the rate began to rise. Experts suggest that monetary policies, such as raising the base interest rate, or fiscal policies that accumulate massive debt wil…
The Japanese yen has weakened considerably in recent years, so the United States has just intervened to support the currency of its ally. But this operation may not be enough to permanently reverse the trend. ...
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