The United States has taken steps to support the Japanese yen following a significant depreciation against the US dollar. The yen fell by more than 10 percent relative to the dollar in the year preceding the intervention and had lost about a third of its value since 2020.

This move is part of a broader pattern under the Trump administration, which has also supported the Argentine peso and engaged in currency discussions with the United Arab Emirates. Notably, these interventions occurred even though none of the countries involved had reached the typical emergency thresholds that usually prompt such actions.

Cornell University's Eswar Prasad noted that the reasons behind these interventions are not solely economic. For example, US support for the Argentine peso helped influence elections favorably and contributed to fiscal reforms that stabilized the currency.

Similarly, after the outbreak of the Iran war, Washington and the UAE disclosed talks about arrangements for the UAE to obtain dollars in exchange for dirhams.

Such interventions are considered risky and costly, as they involve buying or swapping dollars for foreign currencies that are depreciating. Nonetheless, the US has actively engaged in these measures to support allied currencies in the Asia-Pacific region and beyond.

Sources

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