Can US-Japan Collaboration Save the Yen? Chen Feng-hsin Reveals Long-term Trend: Bearish Sentiment Remains Strong

Reuters reported that U.S. Treasury Secretary Scott Bessent wrote 'buy 5 to 10 billion USD worth of Japanese yen (JPY)' on his to-do list during a cabinet meeting in late July, signaling the U.S. government's intent to intervene in the market to support the yen. In response, veteran media personality Chen Feng-hsin analyzed the situation on her program 'Feng Xiang Long Feng Pei,' stating that unless the U.S. and Japan address the structural issues behind the yen's weakness, Wall Street remains skeptical of the joint intervention. She emphasized that unless the U.S. sells U.S. Treasury bonds or the Federal Reserve allows Japan to use its U.S. Treasury holdings as collateral, the yen's depreciation trend is unavoidable.

Chen pointed out that the joint intervention by the U.S. and Japan—the first since 1998—is a major event in the financial world, prompting investment banks on Wall Street to rush to publish reports analyzing the White House's intentions, the scale of investment, and whether this can reverse the yen's downward trend. However, all major investment banks concluded that while joint intervention may temporarily halt the yen's depreciation, 'without fundamental structural changes, the long-term bearish trend cannot be reversed.'

Although the yen appreciated by 5% following the intervention, it depreciated by 3% within less than two weeks—erasing more than half of the gains. Japan spent over $80 billion in this intervention, the largest in its history. With the U.S. also participating, the total intervention amount could reach $90–100 billion if Bessent follows through on his plan. Yet, the impact was halved within two weeks. Subsequently, the Japanese government began supporting a rate hike by the Bank of Japan.

Chen noted that the probability of a rate hike by the Bank of Japan in September is as high as 90%, while the likelihood of a Fed rate hike is declining. 'With narrowing interest rate differentials, shouldn't the yen be more stable?' she questioned. However, she stressed that 'the interest rate gap still exists,' meaning bearish sentiment remains strong. Additionally, Japan's worsening fiscal deficit has triggered global distrust in the yen. 'If structural issues remain unaddressed, it will be extremely difficult for the government to use its financial resources to reverse the dominant market trend.'