Japan and the United States announced Monday that they conducted a coordinated intervention last week to counter the yen¡¯s excessive weakness against the dollar, saying they stand ready to intervene again if needed.
With backing from the U.S., currency interventions ¡ª whose effects are typically short-lived when conducted alone ¡ª could prove more effective and more lasting, analysts said.
The joint intervention aligns with U.S. interests as well, as Washington wants to prevent its trade deficit from widening due to a weaker yen, which recently declined to levels not seen since 1986. The U.S. side also wants to avoid a scenario in which Japan dumps U.S. Treasurys in solo interventions to defend the yen, which would drive U.S. long-term interest rates higher, analysts said.
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