The US and Japan carried out their first joint currency intervention in nearly three decades on July 31, spending approximately $36.58 billion to push the yen from above 163 per dollar to 155. Within a week, the yen’s recovery had largely eroded, falling back to around 157.76 by August 7, wiping out nearly half of those gains, at a cost of roughly $4.5 billion per yen of lasting improvement. This situation reflects a fundamental problem: the Bank of Japan has kept interest rates far below those in the US, making the dollar a more attractive destination for capital. US Treasury Secretary Scott Bessent stated that Washington will not hesitate to participate in further joint intervention. Key data to watch in the coming weeks include US inflation prints and signals from the Bank of Japan’s next policy meeting.
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