The U.S. dollar saw a significant decline against the Japanese yen on Monday. This followed confirmations by U.S. President Donald Trump and Japan’s finance minister that both nations had intervened in currency markets. Prior to this, the dollar had been trading over 163 yen, reaching a 40-year high. However, the suspicion of regulatory intervention caused the dollar to dip below 160 yen. By early Monday, following the official announcement, the dollar fell approximately 1% to 156.34 yen. This marked a considerable shift in the exchange rate.
The persistent weakness of the yen against the dollar has been troubling for Tokyo. Japan imports a substantial amount of its consumed goods, meaning a weaker currency leads to higher prices and increased inflation. Earlier efforts to strengthen the yen against the dollar saw little success. Last week, speculation arose that the U.S. might be assisting. President Trump, when questioned, mentioned the strong financial ties between the countries, stating, “We have a good relationship with Japan. We’re very strong financially, and they have a weakening yen. They wanted a bit of help, and we always support Japan. Aside from Pearl Harbor, they’ve been good partners.” Trump declared the intervention provided “financial benefit” and served as a “signal of friendship.” He argued it was beneficial for the global economy.
In Tokyo, Finance Minister Satsuki Katayama confirmed the intervention. The finance ministry coordinated with the U.S. Treasury Department to purchase yen. This move followed a joint statement from last year, with the aim to “counter excessive volatility and disorderly movements in the Japanese yen recently.” The statement mentioned the ministry’s readiness to take further steps if required.
Such open admissions of market intervention are uncommon, according to Neil Newman of Astris Advisory Japan. The last notable occurrence followed the 2011 earthquake and tsunami disaster in northeastern Japan. Newman added that a weaker dollar could make U.S.-made products more attractive by reducing their costs in yen, potentially boosting American exports to Japan. “Though it’s rare for Americans to collaborate with the Japanese like this, their interests are currently aligned,” he explained.
The article was compiled with contributions from AP journalists in Tokyo and Bangkok.