US and Japan jointly intervene to prop up yen in rare move

Japan and the US jointly intervened last week to halt a slide in the yen after it weakened to a fresh 40-year low. This joint intervention is the first since 2011, when both countries took coordinated action to weaken the yen after an earthquake and tsunami. Japan's finance ministry and US Treasury Secretary Scott Bessent have stated they will not hesitate to conduct joint interventions in the future. Shigeto Nagai, head of Japan economics at Oxford Economics, told the BBC that "The United States agreed to participate in the coordinated intervention because it serves its national interests by offering the prospect of significant benefits at a low cost."

The intervention highlights both countries' efforts to prevent a sell-off in the yen and Japanese government bonds from affecting the global economy, including potentially pushing up borrowing costs for Washington. The two countries are expected to continue to intervene "intermittently in a coordinated manner for some time." The Bank of Japan last raised interest rates in June, increasing its main rate to 1%, the highest level since September 1995. In comparison, the US Federal Reserve's benchmark rate is in a range of 3.50% to 3.75%.