Washington: The US made a rare return to Japan's currency market Sunday, buying yen for the first time in more than a decade in what President Donald Trump described as 'a signal of friendship.' The move aimed to support the yen after it fell to a 40-year low against the US dollar.
According to Anadolu Agency, the intervention followed a report by the Financial Times that the Federal Reserve Bank of New York sold euros to buy yen on behalf of the Treasury Department, citing sources familiar with the matter. President Trump emphasized the strategic importance of supporting the yen, stating that it would be 'good for the world economy,' referencing past US interventions that bolstered other economies, such as the $20 billion bailout for Argentina and the capture of Venezuelan President Nicolas Maduro.
Treasury Secretary Scott Bessent revealed that the US and Japan jointly intervened in foreign exchange markets to curb disorderly swings in the yen. He assured that the Treasury Department "will not hesitate to participate in further joint intervention," expressing strong support for Japan's decisive market and monetary steps to correct the yen's substantial undervaluation.
Japan's Finance Ministry echoed this sentiment, noting that the joint intervention targeted "excessive volatility and disorderly movements" in the yen. The ministry affirmed its continued coordination with Washington and its readiness to conduct further joint interventions as needed.
President Trump suggested that the intervention could also yield financial benefits for the US, although he did not provide details on how. He also noted the longstanding positive relations between the US and Japan, aside from historical conflicts.
This intervention marks the first joint currency action since 2011 when the yen surged to post-war record highs against the US dollar. That surge was due to anticipated asset repatriation by domestic insurance firms following a devastating earthquake, which led the Group of Seven (G7) nations and the Bank of Japan to intervene in a coordinated effort to stabilize the currency market.