Yen Surrenders Half Its Gains After US-Japan Intervention

The yen has relinquished nearly half of the gains it made following coordinated intervention by the U.S. and Japan.

Officials from both nations have stated their determination to continue defending the yen if necessary. The intervention, which involved the U.S. selling euros for yen, initially strengthened the yen to 155 against the dollar, a rise from its previous level just above 163. This action by the Treasury and the Bank of Japan occurred before the European Central Bank was informed, according to reports.

In April, Japan's authorities conducted a single-day foreign exchange intervention, spending a record 6.28 trillion yen, approximately $40 billion, to buy yen and sell dollars. This intervention has also influenced expectations for future monetary policy in Japan, with some analysts now anticipating a potential interest rate increase in September, a shift from earlier predictions of a December move. BlackRock has suggested that the U.S. selling euros to support the yen could introduce geopolitical risks.