Japanese Yen: Intervention supports JPY against US Dollar – BBH

Brown Brothers Harriman’s (BBH) Elias Haddad reports USD/JPY plunged in Tokyo after confirmed joint US-Japan intervention to stop the Japanese Yen’s slide, with officials warning they may act again. Haddad highlights historical success of coordinated FX operations and expects USD/JPY to gravitate toward 140.00, in line with the US-Japan real 10-year yield spread.

Joint FX action targets lower USD/JPY

"USD/JPY plunged early in the Tokyo session, dropping by roughly 2 big figures to an intra-day low around 155.23."

"Japan and US confirmed joint intervention to halt the yen’s slide. US Treasury Scott Bessent wrote “Friday's coordinated foreign-exchange actions countered disorderly yen movements."

"A few minutes later, Japanese Finance Minister Satsuki Katayama released a statement confirming it had “purchased the Japanese yen in coordination with the U.S. Department of the Treasury.” Both warned they will not hesitate to conduct further joint intervention."

"We’ll know the size of Japan’s intervention by end-August, but the US figure will come much later around mid-November. Regardless, history is clear, joint FX intervention packs a punch, and investors should lean with the official flow, not against it. Since 1998, all three coordinated US FX intervention episodes have been successful."

"USD/JPY is on track to trade closer to 140.00, the level implied by US-Japan real 10-year bond yield spread."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)