KEY TAKEAWAYS
- US and Japanese officials acknowledged that they launched a joint foreign exchange intervention on 31 July, bolstering the yen after months of decline, and signaled that additional intervention could follow.
- In the near term, the intervention could relieve some pressure on Prime Minister Takaichi Sanae insofar as a stronger yen could deliver relief to household purchasing power and address complaints that the government has not addressed cost-of-living issues.
- But Takaichi will still face foreign and domestic pressure to address the role that loose monetary policy and fiscal expansion have played in the yen’s weakness, pressure that threatens her broader political project.