Japanese and South Korean financial authorities took coordinated action in foreign exchange markets on Wednesday to support their national currencies, according to official statements and market data. The intervention, which involved purchasing the yen and the won, was a response to the currencies’ continued decline against a strong U.S. dollar.
The move marks a rare instance of joint currency market action between the two nations. Japan’s Ministry of Finance confirmed its intervention after the yen fell to a new multi-decade low. Masato Kanda, Japan’s top currency diplomat, told reporters the government would take “appropriate actions against excessive currency moves.” He did not disclose the scale of the intervention.
In Seoul, South Korea’s Ministry of Economy and Finance and the Bank of Korea released a joint statement expressing “serious concern” over the won’s recent depreciation. The statement noted that authorities were closely monitoring currency movements and foreign exchange market dynamics. While South Korean officials did not explicitly label their actions an intervention, market traders reported seeing significant dollar-selling activity from what they identified as state-backed banks.
Following the reported actions, both currencies showed immediate, though temporary, gains. The Japanese yen strengthened from its low of 158.4 per U.S. dollar to approximately 155. The South Korean won recovered from a 17-month low, moving from 1,400 per dollar to near 1,385.
The depreciation of both currencies has been largely attributed to the persistent strength of the U.S. dollar, which is supported by the U.S. Federal Reserve’s monetary policy. The interest rate differential between the U.S. and both Japan and South Korea has driven capital toward dollar-denominated assets, placing sustained pressure on the yen and won.
The coordination between Tokyo and Seoul was highlighted during a trilateral finance ministers’ meeting held last week with U.S. Treasury Secretary Janet Yellen. In a joint statement following that meeting, the three countries acknowledged “serious concerns of Japan and the Republic of Korea about the recent sharp depreciation of their currencies.”
When asked about potential U.S. participation in the market actions, a spokesperson for the U.S. Treasury Department reiterated its long-standing position that currency values should be determined by open, market-based fundamentals. The Treasury did not confirm any involvement in Wednesday’s intervention.
Currency market interventions are typically conducted by a nation’s central bank or finance ministry to influence the exchange rate of its currency. Coordinated interventions, where multiple countries act simultaneously, are less common and are generally reserved for periods of significant market volatility.
