The U.S. dollar weakened sharply against the Japanese yen on Monday after U.S. President Donald Trump and Japan's finance minister confirmed a joint market intervention. Japan's finance ministry stated that it conducted a coordinated yen-buying intervention with the U.S. Treasury on Friday. This rare joint effort, the first since 2011, was designed to shore up Japan's currency and prevent a selloff in the yen and Japanese government bonds from causing global spillovers.
Before the intervention, the dollar had touched 40-year highs, trading above 163 yen. Following the announcement, the yen surged, gaining as much as 1.4% during morning trading in Tokyo. The currency reached 155.20 per dollar, its strongest level since early May, while other reports placed the rate at 156.34 and 157 yen per dollar. The dollar's slide was also triggered by last week's Federal Reserve meeting.
Japanese policymakers had grown concerned over the yen's weakness, which increased import prices and household living costs. While the U.S. Treasury joined the effort to stem the slide and address turmoil in Japanese markets, some economists suggest the move will not fix underlying issues. Despite this, Japan's Finance Minister Satsuki Katayama and officials from both countries vowed they will not hesitate to conduct further joint interventions in the future.