Japan Intervenes to Defend the Yen Near Historic Lows, Reportedly With US Support

Japanese authorities have stepped into the foreign exchange market with a series of interventions aimed at halting a sharp slide in the yen, which had fallen close to historic lows against the dollar. According to traders, the effort was unusual in that it appeared to draw support from US authorities: the Federal Reserve Bank of New York was reported to have sold euros and bought yen on behalf of the US Treasury, marking the first time in nearly three decades that Washington has directly supported Japan's currency through outright purchases. The moves came amid heightened wariness after comments from Japan's finance minister, which helped push government bond yields higher and weighed on Tokyo stocks. Strategists said the apparent US cooperation could limit further yen weakness in the near term, as markets grow cautious about additional intervention. However, others cautioned that intervention alone may struggle to provide lasting support without a shift in interest-rate expectations, particularly with the Federal Reserve seen as more likely to raise than cut rates in the months ahead. The episode underscores the pressures facing Japanese policymakers as they normalise monetary policy.