The unusual step by the US and Japan: The secret move in the currency market revealed
They haven't done it since 2011, but now Japan and the US are forced to cooperate and inject tens of billions into the currency market to stop the extreme deterioration that threatens the markets.
Japan and the United States are taking an unusual step in the currency market in an attempt to stop the sharp decline of the Japanese yen, according to a Reuters report. Japan's Finance Minister, Satsuki Katayama, is expected to officially announce that both countries have carried out a joint operation in the foreign exchange market with the goal of stabilizing the local currency.
According to the Reuters report, the move comes after the Japanese yen weakened to its lowest level against the US dollar in about 40 years, since 1986. As part of the activity, the Japanese government and the country's central bank began purchasing yen and selling dollars in the market, with estimates suggesting that Tokyo invested about 59 billion dollars in an attempt to strengthen the currency.
The United States is also involved in the move, as the US Treasury Department instructed banks in the country to be prepared for possible operations in the yen market. Additionally, US Treasury Secretary Scott Bessent was documented with a notebook in which a task appeared regarding the purchase of Japanese yen in the amount of 5 to 10 billion dollars.
The weakening of the yen stems mainly from the interest rate gaps between the countries. While the United States maintained a high interest rate for a long period to deal with inflation, Japan pursued a lower interest rate policy, which led many investors to prefer the dollar over the Japanese currency.
This is an especially rare move, as the last time the US and Japan carried out a joint intervention in the currency market was in 2011. Beyond the attempt to save the yen, the US is also interested in maintaining the stability of the financial markets, as Japan is one of the largest holders of United States government bonds.
The concern is that a large-scale sale of American bonds by Japan to finance the intervention could have harmed the American market and led to an increase in financing costs. Therefore, the cooperation between the countries is intended not only to support Japan, but also to prevent wider shocks in the global economy.
The move reflects the growing concern among the powers regarding the impact of an overly weak currency on the cost of living, import prices, and economic stability.
