Why the U.S. Intervened to Prop Up Japan’s Yen
The U.S. Treasury recently intervened in currency markets to support the Japanese yen by selling euros and buying yen. This rare move aims to stabilize the currency and reduce volatility in Asian markets.
Why it matters
Direct currency intervention by the U.S. is highly unusual and signals significant concern regarding global financial stability and regional economic health.
Brad W. Setser served as a senior advisor to the U .S. Trade Representative from 2021 to 2022. He had previously served in the U.S. Treasury from 2011 to 2015, where he worked on currency policy, financial sanctions, commodity shocks, and other issues . He is the author of the Follow the Money blog.
The United States intervened in currency markets this past Friday, July 31, selling euros from its international reserves and buying the Japanese yen. Secretary of the Treasury Scott Bessent confirmed the details of the effort on Monday, August 3, telling CNBC that the United States bought yen alongside Japan to curb currency volatility and reduce risks to Asian markets. He added that intervention can send a market signal, but Japan also needs to deliver policies that support the currency.
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