Japanese Yen holds onto weekly losses amid absence of US-Japan intervention follow-up
- The Japanese Yen has remained weak against its major currency peers this week.
- The lack of follow-up US-Japan joint intervention pressured the Yen's last week's outperformance.
- German Industrial Production rises 0.2% MoM in June, beats 0.1% estimates.
The Japanese Yen (JPY) has underperformed its major currency peers this week due to a lack of follow-up joint intervention by the United States (US) and Japan.
Japanese Yen Price This week
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies this week. Japanese Yen was the weakest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.25% | 0.37% | 0.81% | 0.12% | 0.08% | 0.57% | 0.62% | |
| EUR | -0.25% | 0.13% | 0.57% | -0.13% | -0.07% | 0.36% | 0.37% | |
| GBP | -0.37% | -0.13% | 0.11% | -0.25% | -0.19% | 0.23% | 0.25% | |
| JPY | -0.81% | -0.57% | -0.11% | -0.61% | -0.57% | -0.12% | -0.10% | |
| CAD | -0.12% | 0.13% | 0.25% | 0.61% | 0.05% | 0.50% | 0.50% | |
| AUD | -0.08% | 0.07% | 0.19% | 0.57% | -0.05% | 0.38% | 0.43% | |
| NZD | -0.57% | -0.36% | -0.23% | 0.12% | -0.50% | -0.38% | 0.05% | |
| CHF | -0.62% | -0.37% | -0.25% | 0.10% | -0.50% | -0.43% | -0.05% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
Last week, both countries jointly intervened in FX markets to prop up the Japanese currency. Japan's Ministry of Finance (MoF) confirmed that the US and Japan intervened together to “counter excessive volatility and disorderly movements in the Japanese yen in recent months.”
Yen support seen hinging on credible US-Japan intervention backstop
Commerzbank’s Thu Lan Nguyen stressed that the durability of the recent Yen rebound will depend on whether markets remain confident that joint action by policymakers is not a one-off. She argued that “for the yen to retain its gains, markets must be convinced that coordinated interventions by the BoJ and US authorities will remain on the table going forward.” In that context, Nguyen notes that US Treasury Secretary Scott Bessent has already signalled a willingness to keep the option open, having “suggested that the United States would be willing to act again if necessary,” reinforcing the perception of an ongoing US-Japan intervention backstop even as questions persist over the sustainability of such efforts.
Japanese Finance Minister (FM) Satsuki Katayama also said on Monday that Japan “won't hesitate to carry out more forex intervention with the US”.
Meanwhile, the Euro (EUR) trades broadly calm after the release of the better-than-expected German Industrial Production data for June. Destatis reported that overall industrial activity grew 0.2% Month-on-Month (MoM), faster than the 0.1% estimate, but slower than the previous revised reading of 0.7%. On an annualized basis, the data declined by 0.1% after remaining flat in May.
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
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