Washington and Tokyo coordinated to support the yen via Fed-backed dollar liquidity, but fundamentals remain unchanged, ING says.
The US and Japan conducted a rare joint foreign-exchange intervention to stem the yen’s decline, with the Federal Reserve facilitating dollar liquidity through its FIMA repo facility. Japan raised dollars against Treasury holdings instead of selling them outright, avoiding market disruption.
The move follows months of yen depreciation, with USD/JPY nearing 160, a level Tokyo has previously defended. Analysts note the intervention is unlikely to push the pair sustainably below 155, given the Fed’s near-hiking stance and Japan’s loose monetary policy.
ING’s Chris Turner views the action as containment, capping further yen weakness toward 160 while buying time for Tokyo to introduce yen-supportive policies, such as incentives for domestic asset investment.