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Japanese Yen jumps as US-Japan confirm joint intervention, hint further action
- USD/JPY falls to around 156.45 in Monday’s early European session.
- Japan and the US confirm a joint JPY-buying intervention, signal more action.
- Trump said Iran talks would resume Monday after calling off planned strikes.
The USD/JPY pair tumbles to near 156.45 during the early European trading hours on Monday. The Japanese Yen (JPY) climbs amid speculation that Japanese authorities may have intervened to prop up the currency again after coordinated action between the US and Japan last week.
Japan’s Finance Minister Satsuki Katayama said on Monday that Japan and the United States (US) conducted coordinated Yen-buying intervention and will not hesitate to take further action, per Reuters. Katayama confirmed a rare bilateral action to halt the JPY’s slide to fresh 40-year lows.
Meanwhile, US Treasury Secretary Scott Bessent said that Washington wouldn’t hesitate to step into the market again. US President Donald Trump said on Sunday the US was helping Japan prop up the JPY as a sign of friendship and to help the world economy.
“It seems likely that authorities would intervene further in the coming days if the yen begins to unwind the recent move, as was the case in May of this year,” Goldman Sachs Group Inc. strategists including Kamakshya Trivedi wrote in a note. “We continue to think intervention is an effective tool for authorities to buy some time before fundamental factors turn more positive.”
Uncertainty in the Middle East remains high despite hopes of a breakthrough between the US and Iran. Bloomberg reported on Monday that Trump said that a new round of Iran talks would begin Monday afternoon after he cancelled a planned attack on Iran partially in response to pleas from US allies in the Middle East, including Saudi Arabia.
However, Iranian officials said that Trump’s claim that Tehran had requested a pause “was nothing but a new lie.” Any signs of renewed escalation in the Middle East could boost the Greenback against the JPY in the near term.
Yen seen as undervalued as Japan authorities urged to back firmer currency stance
Strategists at BNY Mellon note that official rhetoric is turning more supportive of the Yen, pointing out that U.S. Treasury Secretary Scott Bessent said on Thursday that the Japanese Yen “looks very undervalued and should strengthen further,” while also stressing that “excessive volatility in the currency isn’t healthy.” In their view, “reported intervention and a firmer BoJ message could change that quickly.” BNY Mellon argues that stronger intervention would demonstrate that the authorities are prepared to resist further depreciation, while clearer policy guidance would “reduce the credibility discount embedded in JPY assets.”
