Yen Pauses Rally as Intervention Threat Remains

The Japanese yen traded around 157.5 per dollar on Wednesday, pausing its recent rally even as US Treasury Secretary Scott Bessent reaffirmed Washington’s ongoing support for Japan following a historic joint currency intervention. The yen had surged as much as 5% over three sessions after Tokyo and Washington carried out coordinated yen-buying on a scale not seen in decades, with both governments signaling they remain prepared to intervene again if necessary. Bank of Japan data showed Tokyo spent about ¥5.33 trillion during Friday’s operations, after reportedly conducting a record ¥8.45 trillion intervention the day before. The yen had weakened to four-decade lows last month amid higher energy costs, mounting fiscal concerns, and persistently wide interest rate differentials. Meanwhile, the latest data showed Japan’s real wages rose for a sixth consecutive month in June, reinforcing the case for additional BOJ interest rate hikes.

The Japanese yen traded near 157 per dollar on Tuesday, holding onto most of its gains from the previous three sessions as signals of coordinated support from the US and Japan kept markets alert for further intervention. US Treasury Secretary Scott Bessent urged the Federal Reserve to expand its Foreign and International Monetary Authorities Repo Facility, which allows foreign governments to obtain US dollars using their Treasury holdings as collateral. The remarks followed confirmation from both Bessent and President Donald Trump that the US had jointly intervened with Japan to support the yen. Meanwhile, Bank of Japan data showed Tokyo spent around ¥5.33 trillion during Friday’s operations, after reportedly carrying out a record single-day intervention worth ¥8.45 trillion a day earlier. The yen had fallen to four-decade lows last month amid rising energy costs, growing fiscal concerns, and persistently wide interest rate differentials.

The Japanese yen strengthened toward 155 per dollar on Monday before pulling back, bringing its gains to as much as 5% over three sessions, after the Finance Ministry confirmed it carried out coordinated yen-buying operations with the US Treasury last week following the currency's slide to 40-year lows. Japanese authorities also warned they stand ready to conduct additional coordinated interventions if needed, adding that they remain in close contact with their US counterparts. US Treasury Secretary Scott Bessent also confirmed the joint action to counter disorderly moves in the yen, while President Donald Trump previously said the US joined last week's coordinated intervention as a show of support for Japan and to help safeguard global economic stability. The yen had fallen to four-decade lows last month amid pressure from elevated energy costs, mounting fiscal concerns, and persistently wide interest rate differentials.