3 weeks ago
Yen Surrenders Nearly Half Its Gains From US-Japan Intervention
The yen is the money used in Japan.
Lately, the yen has been getting weak, which means you need more yen to buy one dollar.
To help, the governments of Japan and the United States worked together to buy yen.
That made the yen stronger, and on Monday it was at its strongest point of the week.
But by Friday, the yen gave back almost half of those gains.
It is now worth about 158 yen per dollar again.
The yen stays weak because America's interest rates are much higher than Japan's, Japan owes a lot of money, and there is trouble in the Middle East.
Some traders think Japan and the US may step in again to help the yen.
Others think helping the yen only works for a short time.
The yen traded around 158.45 per dollar on Friday, surrendering nearly half of the gains made after the joint US-Japan intervention.
Japan and the United States carried out their first joint yen-buying operation since 1998 after the yen neared a four-decade low around 164 per dollar.
The pullback underscores the limits of intervention, as a wide US-Japan interest-rate gap, Japan's high debt load, and geopolitical uncertainty continue to weigh on the currency.
The dollar posted its biggest daily gain in two weeks on Thursday as oil prices climbed on fading optimism that Middle East tensions would ease.
Analysts say another intervention is likely if dollar-yen approaches 160, while overnight index swaps imply about a 60% chance of a Bank of Japan rate hike by September.
- Who
- Japan's and US authorities, including Japan's top currency official Atsushi Mimura, intervened to support the yen; traders and analysts are watching for possible further action.
- What
- The yen gave back nearly half of its intervention-driven gains, trading around 158.45 per dollar on Friday after reaching 155.23 on Monday.
- Where
- Global foreign-exchange markets; the intervention was carried out jointly by Japan and the United States.
- When
- During the reported week in 2026, with the joint intervention's strong point reached on Monday and Friday-morning trading levels cited.
- Why
- A wide interest-rate gap to the US, Japan's high debt load, and geopolitical uncertainty continue to weigh on the yen, underscoring the limits of intervention in reversing its longer-term decline.
Defenders of yen intervention
Skeptics of yen intervention
Likelihood of another intervention
Defenders of yen intervention
Traders speculate authorities may step in again, and one strategist says the possibility of another round of intervention is high, especially as dollar-yen approaches 160; US and Japanese officials have warned investors they are determined to keep defending the yen if needed.
Skeptics of yen intervention
Bloomberg strategists suggest the intervention may be a one-and-done event, noting a second failure to drive dollar-yen below 155, with Treasury yields again becoming the catalyst for a firmer dollar.
Effectiveness of intervention
Defenders of yen intervention
Japan's top currency official, Atsushi Mimura, said authorities would respond to foreign-exchange moves in coordination with monetary policy, and officials warn investors they are determined to defend the yen.
Skeptics of yen intervention
The pullback underscores the limits of intervention in reversing the yen's longer-term decline; for intervention to be effective, it needs to be accompanied by faster BOJ rate hikes or a backdrop favoring Federal Reserve easing.
Key facts
- Yen level on Friday
- Around 158.45 per dollar
- Post-intervention high (Monday)
- 155.23 per dollar
- Four-decade low
- Near 164 per dollar last week
- First joint yen-buying operation since
- 1998
- Bank of Japan benchmark rate
- Left unchanged last week
- Implied chance of BOJ hike by September
- About 60% per overnight index swaps
- Dollar's biggest daily gain in two weeks
- Thursday, as oil prices climbed
Quotes
Moh Siong Sim
Strategist at Oversea‑Chinese Banking Corp
“The possibility of another round of intervention is high especially as dollar‑yen approaches 160”
livemint.com
Sources
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