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U.S.-Japan yen intervention lifts the currency, spot swings near ¥157.5

The joint operation pushed the yen to ¥155.20 before it reversed, underscoring how intervention effectiveness will depend on the path of U.S. and Japanese interest rates.

Reported · Written up by our desk · Major Pairs

Japan and the United States jointly intervened to support the yen after it weakened to nearly ¥164 per dollar, its weakest level in roughly four decades, ConnectCRE reports.

The intervention briefly drove the currency to ¥155.20, its strongest level since May, before it gave back part of the move and settled near ¥157.50, with the source noting that longer term impact hinges more on interest rates than on the amount spent.

The article says past episodes showed official yen buying has been less durable when Federal Reserve policy was restrictive, and more sustained when U.S. rates later declined.

ConnectCRE also highlights risks tied to larger, shorter-lived interventions, including weaker demand for Japanese government bonds that could lift domestic yields, potential reductions in Japan’s Treasury holdings to fund interventions, possible yen-driven capital repatriation by Japanese investors, and potential destabilization of the carry trade if the yen appreciates rapidly.

Since Japan resumed yen purchases in September 2022, the Ministry of Finance has spent an estimated $240 billion to $255 billion supporting the currency, and the source adds that it excludes last week’s amount because Japan had not released the official figure, while preliminary estimates suggest nearly $100 billion spent over two days and possibly a record 48-hour intervention.

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