#There is attention The last time the US entered the market to buy the yen was on June 17, 1998. A month later, the American stock market went into a downfall, which eventually dropped about 20%. When the value of your country's currency has reached the lowest level in the last 40 years and you are under the burden of debt, you have to sell a liquid asset and buy your own money to defend your currency. 1. What is Japan's largest liquid asset? US Treasury Bonds. 2. Who is the largest foreign holder of US Treasury bonds in the world? Japan itself. 3. That is, if the United States does not act to strengthen the yen, Japan may be forced to sell part of its American bonds, which will ultimately serve the stock market. Now see the timeline: July 23: The yen hits a 40-year low against the dollar. Trump says: "Japan has asked us for help." 4 days later: July 30: The US Treasury announces that for the first time since 1998, it will buy and support the yen by selling the euro. There is a reason why it is selling euros and not dollars: the situation of the dollar index is already bad enough and America does not want to put more pressure on its own currency by directly selling dollars. By selling the euro, it strengthens the yen, and without directly weakening the dollar, on the other hand, it raises the parity rate of the yen. I am not saying that the stock market crash will definitely happen again this time, but a correction in the range of 10% is not a strange scenario at all.
