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Yen intervention fades as currency stays under pressure
The yen pair has slipped to around 159 per dollar after Japan and the U.S. spent billions on yen-buying, with analysts citing a persistent U.S.-Japan rate gap and weak Japanese money growth.
Japan and the U.S. have already seen much of their recent yen-buying push unwind, after a coordinated intervention in late July that briefly lifted the currency. The yen had erased roughly half of those gains within two weeks and was trading near 159 per dollar, according to Yahoo Finance.
The operation followed earlier yen support efforts by Japan's finance ministry, which spent an estimated $74 billion in late April and then another $59 billion on July 30, when the yen was near 40-year lows around ¥163.73. Yahoo Finance also notes that Treasury Secretary Scott Bessent reached out to banks to buy an estimated $5-10 billion worth of yen, while the New York Fed used an unusual mechanism that sold euros to fund yen purchases for the U.S. Treasury.
That approach pressured the euro, which fell more than 4% versus the yen over days, but the effect on the yen proved temporary. By August 11, the yen-dollar pair had drifted back toward ¥159.28, leaving traders still pricing in downside protection in case of another round of intervention.
Economists cited by Yahoo Finance point to structural drivers that intervention does not address, including an ongoing U.S.-Japan interest rate gap. U.S. rates were cited in the 3.5% to 3.75% range versus Japan at about 1.0%, along with Japan’s debt-to-GDP above 200% and broad money supply growth around 2.2% annually, below the roughly 6% pace economists say is needed to help the Bank of Japan reach its 2% inflation target.