United States Treasury Buys Yen With Japan to Halt a 40-Year Low, Its First Such Intervention in Over a Decade

The United States Treasury intervened in the currency market on Friday to buy Japanese yen, joining an operation by Tokyo to halt the yen's steep fall against the dollar. According to Nikkei Asia and CNBC, the Federal Reserve Bank of New York sold euros for yen on the Treasury's behalf through Goldman Sachs and Morgan Stanley, the first coordinated United States-Japan intervention since 2011 and Washington's first yen-buying in more than a decade.

An unusual detail showed the scale. The Israeli financial outlet Globes reported that Scott Bessent, the United States Treasury Secretary, was photographed with a notepad listing a task to purchase between 5 billion and 10 billion dollars of yen, and that Bessent had described the currency as significantly undervalued. The buying pushed the dollar down as much as 3.6 percent against the yen, briefly to about 157.96 yen, before the pair returned toward 160.47, leaving the yen close to the low that had prompted the intervention.

The intervention addresses the effect rather than the cause. The yen is weak because the Bank of Japan has held policy far looser than the Federal Reserve for years, and coordinated buying with borrowed reserves cannot close that difference. Investors seeking protection from currency debasement continued to hold hard assets, with gold near 4,100 dollars an ounce, silver around 58 dollars, and bitcoin near 65,000 dollars.