Overview
- Coordinated purchases of yen by the United States and Japan on July 30 and July 31 pushed USD/JPY down from about 164 to near 155 and left the currency trading around 158 with high volatility.
- Both governments said they stand ready to intervene again, but market participants caution that the moves so far have only provided short-term support rather than a lasting reversal.
- Reporting shows the US financed part of its yen purchases by selling euros from reserves and informed the European Central Bank only after the sale, drawing sharp criticism from senior ECB officials.
- The US Treasury said decisions on allocating funds from the Exchange Stabilization Fund are made without prior coordination with foreign authorities, a practice that broke with long-standing informal norms.
- Analysts warn that a durable yen recovery will likely require repeated Bank of Japan rate hikes or other structural incentives to bring capital back to Japan, and that the interventions may also aim to limit disruptive rises in US Treasury yields.