US, Japan join forces to boost yen

TOKYO, Aug 3: Japan and the United States said Monday they were ready to act again following their first joint action in 28 years to boost the yen, after the beleaguered currency hit a four-decade low.

The yen has been weakening because of the gap between Japanese and US interest rates, high oil prices and concerns about Prime Minister SanaeTakaichi's spending plans further swelling Japan's enormous debts.

The scale of Friday's joint operation was not known, but it was the first since 2011 when the United States and Japan -- and other G7 members -- sold yen to stop it rising after a huge earthquake.

The last time Washington and Tokyo bought yen was 1998, Japan's finance minister said.

US President Donald Trump confirmed the concerted action aboard Air Force One on Sunday Washington time, calling it a "signal of friendship" with Japan and "good for the world economy".

"And we're always there for Japan. Japan's been very good to us, with the exception, of course, of Pearl Harbor," Trump added, referring to the Japanese attacks on the Pacific US naval base in World War II.

"We will not hesitate to participate in further joint intervention," US Treasury Secretary Scott Bessent said, adding that the US officials "strongly support Japan's decisive market and monetary steps to correct the substantial undervaluation of the yen."

"The Takaichi government is moving into an exciting new phase of Abenomics, as nearly 15 years of powerful stimulus have created durable, robust underlying economic dynamics," he added.

This referred to the combination of aggressive monetary easing, fiscal stimulus and structural reforms under assassinated former premier Shinzo Abe, a figure greatly admired by Japan's first woman leader Takaichi.

The intervention came after the yen hit 163.99 per dollar last month, its weakest since 1986. On Friday it soared to 157.40, the strongest since early May.

On Monday the exchange rate jumped as high as 155.23, prompting speculation of another intervention. By midafternoon it had eased to 156.81.
"This joint action... countered excessive volatility and disorderly movements in the Japanese yen in recent months," Japan's Finance Minister Satsuki Katayama said.

She added that Tokyo had "received very high praise for robustly revitalising and boosting the economy".

"This is the first time since 1998 that Japan and the US conducted coordinated intervention to buy the yen, so naturally, both countries made their own assessments and decided that such intervention was necessary, which is why they acted in concert," Katayama said.

While good for its big exporters like Sony and Toyota, a weak yen inflates import costs for resource-poor Japan, especially oil just as the war strangles supplies from the Gulf.�" AFP