The Dollar Boomerang Threat: Washington’s Motivations to Support the Yen

The U.S. and Japan jointly intervened to support the yen on Monday after months of dollar strength pushed the exchange rate to its weakest level in four decades, Treasury Secretary Scott Bessent confirmed. The intervention aims not only to help Japan manage currency volatility but also to protect U.S. Treasury markets from potential Japanese selling of dollar-based assets that could slow the American economy. The dollar's dominance in global currency markets—appearing in 89 percent of all trades—means dollar strength abroad can trigger inflation pressures and financial instability in other nations, eventually creating risks for U.S. markets themselves.