US moves to rescue yen from 40-year low:Buys Japanese currency for first time in 15 years; Trump says supporting weak currency is ‘better for the world’

US President Donald Trump stated that America has purchased Japanese yen for the first time in a decade. This was done to rescue the yen from its 40-year low against the dollar. Trump said, “Their currency was weakening and they wanted a little help.” Know the complete details in 10 questions and answers Question 1: What and why have Japan and America recently taken steps in the market? Answer: Last week, the Japanese currency ‘yen’ reached the level of 164 against the dollar, which is the lowest level in the past 40 years. To control this sharp decline, Japan and America jointly intervened in the foreign exchange market. The main objective of this intervention was to stop the excessive volatility of the yen and to control currency speculators. This is the first time in the past 15 years, that is, since 2011, that Japan and America have taken joint action in the currency market. Earlier in 2011, after the earthquake and tsunami in eastern Japan, both countries had taken coordinated action to weaken the yen. This time the objective is to prevent the yen from falling further. Question 2: How much money have both countries used in this intervention? Answer: According to Bank of Japan data, Tokyo sold approximately 59 billion dollars to buy yen in the New York market on Thursday, just before the official joint intervention on Friday. America has not officially disclosed the amount of its purchase, but a photograph of US Treasury Secretary Scott Bessent’s notebook during a cabinet meeting provided a hint, on which was written: “To Do: Buy Japanese Yen $5-10 bil” meaning buy 5 to 10 billion dollars worth of yen. Question 3: What do US and Japanese officials say about this joint action? Answer: Japan’s Finance Ministry: This joint action has been successful in stopping the excessive volatility and uncontrolled movement in the yen in recent months. US Treasury Secretary: Scott Bessent wrote in a social media post that this coordinated action has controlled the uncontrolled movement of the yen. The US strongly supports Japan’s monetary and market measures to correct the heavy devaluation of the yen. American President: Speaking to reporters on Sunday, Trump said, “The Japanese currency was weakening and they wanted a little help. We are always ready to help Japan.” Question 4: What benefit does America have in helping Japan? Answer: Shigeto Nagai, Head of Japan Economics at Oxford Economics, explained that America agreed to participate in this coordinated intervention because it is in its own national interest. If the selling in yen and Japanese government bonds had continued, it would have impacted the global economy and could have increased borrowing costs for Washington as well. Question 5: What immediate impact was seen on the currency market from this intervention? Answer: Following American President Donald Trump’s comments, the dollar fell 0.2% to 157.07 yen, which is significantly better than last month’s record low level of 164. Question 6: What can be expected ahead? Will both countries continue such interventions in the future? Answer: According to expert Shigeto Nagai, both countries may continue to intervene intermittently and in a coordinated manner from time to time in the future. Both Japan’s Ministry of Finance and the US Treasury Secretary have made it clear that they will not hesitate to take action again if needed. Question 7: Why did the Japanese yen reach a 40-year low? What are the reasons behind this? Answer: Since the recession of the 1990s, Japan had kept its interest rates at zero or negative for a long time to boost its economy. In 2024, Japan did raise interest rates, but they still remained quite low compared to the world. Due to low interest rates, international investors borrowed in yen and invested it in currencies offering higher returns. Additionally, heavy foreign investment by Japanese companies and their foreign earnings remaining abroad also weighed heavily on the yen. This had pushed the yen to a 40-year low. Question 8: Did the US-Iran war also impact the yen’s decline? Answer: Yes. The Iran war further accelerated the yen’s decline. According to Keio University Professor Sayuri Shirai, being completely dependent on energy imports, rising oil and gas prices disrupted Japan’s trade balance. This increased inflation and halted the yen’s recovery. Question 9: What were the advantages and disadvantages for both countries from a strong dollar and weak yen? Answer: For America: A strong dollar makes American exports expensive for foreign consumers. This causes losses to American companies. For Japan: A weak yen certainly benefits Japanese exporters and tourists, but it makes the import of essential goods expensive, which increases inflation in the country. Question 10: Can this buying bring about a permanent improvement in the yen’s position? Answer: Bank of America Securities’ Shusuke Yamada believes that such buying in the currency market provides relief only for a short period. Meanwhile, according to a Barclays Bank report, the impact of this joint action will be visible in the initial days, but in the long term, downward pressure on the yen may persist.