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Japanese yen strengthens after joint Japan-US intervention
Japan plans to use the Fed’s FIMA Repo Facility, which lets it access up to $60 billion per day for up to seven days by pledging Treasuries.
Japanese and US authorities conducted joint currency intervention to support the yen amid recent volatility, with Japan’s finance ministry saying the aim was to counter excessive disorderly moves in the currency, according to MUFG commentary shared via FXStreet.
MUFG’s Lee Hardman said the yen has strengthened further at the start of the week following the Friday intervention, described as the first Japan-US joint action since March 18, 2011, when it was used after the March 11 Tohoku earthquake and tsunami.
Hardman added that Japan plans to make use of the Federal Reserve’s FIMA Repo Facility going forward, which would allow Japan to borrow US dollars temporarily by pledging Treasuries as collateral, with access of up to $60 billion per day for up to seven days.
The outlook, according to Hardman, also draws support from more hawkish Bank of Japan guidance and lower oil prices, alongside the threat of additional joint intervention, which he said could discourage elevated short yen positions.