Japanese Yen: US trade focus shapes intervention – Societe Generale

Societe Generale’s Kit Juckes, drawing on Scott Bessent’s perspective, argues that recent coordinated US-Japan action in the Japanese Yen is part of a broader US trade strategy. While Japan seeks to stabilise the Yen and contain import prices, the US is focused on limiting Dollar appreciation versus key Asian trade partners, whose currencies have significantly weakened in real terms.

Yen support tied to wider US goals

"The current focus on the Japanese yen and the coordinated intervention by the US and Japan to support it this week, is understandable."

"History suggests that a single round of intervention is unlikely to be sufficient to turn the trend around, and the FX market is on high alert for the next move."

"But while for Japan, this is all about stabilising the yen, the US has a bigger picture in mind."

"There is a case for seeing the US support for Japan therefore, as a way for the US to try and (at least) prevent further dollar appreciation relative to the region and possibly, to turn the trend around Japan, China and South Korea together, account for around 18% of US trade, compared to around 16% for the Eurozone."

"The choice of starting point may be arbitrary, but the point remains – for the US, supporting the yen is about keeping the dollar down against one of the members of its biggest groupings of trade partners, whereas for the Japanese, it’s about not letting the yen continue to weaken against the dollar and push import prices up too fast."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)