U.S. President Donald Trump made a statement from Air Force One confirming that the United States had partnered with Japan to bolster the yen. He characterized this effort as a sign of mutual goodwill, emphasizing the long-standing U.S.-Japan relationship.
The context behind the intervention
News reports, such as those from France 24 citing the Financial Times, revealed that the U.S. and Japan had jointly intervened in currency markets for the first time in nearly thirty years. At the time, the yen had reached 163.24 against the U.S. dollar, the weakest it had been since 1986.
This downturn stemmed from various factors, including increased U.S. interest rates, higher oil prices, and continuous capital leaving Japan. To counter this, the New York Federal Reserve took the unusual step of selling euros and using the proceeds to buy yen, acting on behalf of the U.S. Treasury.
What Trump said aboard Air Force One
When asked about the rationale for the intervention, Trump emphasized the robust partnership between the U.S. and Japan. He described the action as a 'signal of friendship' and claimed it would yield financial benefits for both the U.S. and the global economy.
Trump also remarked, 'Japan's been very good to us, with the exception, of course, of Pearl Harbor,' alluding to a significant historical conflict that once strained their bilateral ties.
According to reports, Japanese efforts in the currency markets might have totaled around 8.45 trillion yen, or about $52.8 billion, based on estimates from Financial Times. Another source, the Nikkei business daily, placed the figure between 6 trillion and 7 trillion yen. The U.S. reportedly purchased an estimated $5 to 10 billion worth of yen, though the White House has not confirmed the exact amount.
The yen saw a strong rebound last week, sparking speculation about additional moves in the market. This joint action between the U.S. and Japan marked the first such cooperation to support the yen since 1998. Japan and the United States confirmed today they jointly intervened to prop up the Japanese yen, the first such action since 2011.