U.S. Dollar Weakens Against Yen Following Market Intervention

The U.S. dollar experienced a significant drop against the Japanese yen on Monday. This shift occurred after U.S. President Donald Trump and Japan’s finance minister announced market intervention. Previously, the dollar traded above 163 yen, reaching 40-year highs. Following suspected regulatory actions, it fell below 160 yen. Early Monday, after the intervention’s official announcement, it declined by about 1% to 156.34 yen. This change marked a considerable movement in the exchange rate.

The yen’s weakness against the dollar has long troubled Tokyo. Japan imports much of its consumption, so a weak yen pushes prices up, driving inflation higher. Earlier attempts to boost the yen’s value against the dollar were largely futile. Last week, the U.S. was suspected of assisting Japan. Trump explained on Sunday, stating, “We have a good relationship with Japan. We’re very strong financially, and they have a weakening yen. They wanted some help, and we’re always there for Japan due to our strong relations.” He described the intervention as providing “financial benefit” and called it a “signal of friendship.” Trump also noted the move benefits the world economy.

In Tokyo, Finance Minister Satsuki Katayama confirmed the intervention, mentioning the finance ministry’s yen purchase in coordination with the U.S. Treasury Department. The action mirrored a joint statement from the previous year, aiming to “counter excessive volatility and disorderly movements in the Japanese yen in recent months.” The ministry indicated it would take further action if needed.

Neil Newman, managing director and head of strategy at Astris Advisory Japan, noted the rarity of such market intervention admissions. He referenced the last significant instance following the 2011 earthquake and tsunami in Japan. Newman mentioned that a weaker dollar could make U.S. goods more competitive, decreasing their costs in yen and potentially boosting American exports to Japan. “It’s rare for the U.S. to collaborate with Japan on this, but there is a basic alignment of interests,” Newman observed.

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Kurtenbach reported from Bangkok. AP journalist Mari Yamaguchi in Tokyo contributed to this report.