The United States has launched a coordinated intervention with Japan's government to support the value of the yen, as the currency approaches 40-year lows. This marks the first time in 30 years that the US has stepped in to strengthen the Japanese currency.
Japan's economy has been struggling with an accelerating fall in the yen, which makes imported energy and food more expensive for businesses and consumers. Prime Minister Sanae Takaichi is facing political pressure to address inflation and stimulate economic growth.
US President Donald Trump confirmed on Sunday that the Treasury had bought billions of dollars' worth of yen. This intervention follows a note seen by US Treasury Secretary Scott Bessent on Friday, indicating a plan to buy $5-10 billion in Japanese yen.
Analysts suggest the Trump administration's intervention may be linked to concerns that Japan's efforts to strengthen its currency could impact the US economy. Japan has been selling US government bonds to fund its yen purchases, which could lead to increased interest rates on US debt, making government borrowing more expensive for the US.
Japan's public debt currently stands at over 200% of its GDP, the highest level among G20 countries. The Bank of Japan has maintained low interest rates, which contributes to diminishing the yen's value.