The first U.S.-Japan joint currency intervention in three decades has failed to ease market anxiety. The United States bought $5 billion to $10 billion worth of yen while Japan acquired over $50 billion, initially pushing the exchange rate from nearly 164 to about 157 yen per dollar before it pulled back to around 159. The operation has however exposed major structural issues: Japan’s debt exceeds 200% of GDP and the Bank of Japan has been slow to raise rates despite persistent inflation. Wall Street veteran Ed Yardeni compared the global financial system to a giant Jenga tower with the yen as a load-bearing piece. The United States sold euros, not dollars, to buy yen, raising questions about dollar dominance and revealing the Trump administration’s fears about how a spiraling yen could worsen U.S. debt dynamics. Japan holds over $1 trillion in U.S. Treasuries, making it the largest foreign holder of American debt.
Source: Read the original article
