U.S.-Japan Yen Rescue Loses Steam After $55 Billion Push as Debt Fears Persist

3 articles · Updated · Fortune · Aug 15

The joint intervention briefly lifted the yen to about 157 per dollar from nearly 164, but it slipped back to around 159 by Friday, showing limited staying power.
More than $55 billion appears to have been deployed — Japan over $50 billion and the U.S. $5 billion-$10 billion — yet traders kept focusing on Japan’s debt above 200% of GDP, fiscal stimulus and the BOJ’s slow rate response.
That pullback came despite cooler U.S. consumer and producer inflation data, which reduced expectations of a near-term Federal Reserve hike and should have favored the yen through narrower rate differentials.
Analysts now warn the stress reaches beyond Japan: the yen carry trade could destabilize global markets, while intervention funded with euros and borrowing against Treasury holdings highlights risks to U.S. debt financing if Asian reserve managers trim Treasuries.