US efforts to prop up the yen risk doing more harm than good

Since the beginning of 2022, Japan’s currency has fallen a staggering 36 per cent against the US dollar. The surprise coordinated intervention has caused the yen to strengthen to 157 per dollar, its strongest level since May 12. In a report on August 2, Citigroup said “coordinated intervention may be a turning point” for the yen. Bessent has made it clear that the yield on the 10-year Treasury bond is the most important gauge of confidence in the US economy. This would allow Japan to intervene in the currency markets without having to sell Treasuries when trading dollars for yen.