Is the ‘Mar-a-Lago Accord’ being put into action?…US may jointly intervene to support the yen and won [Issue+]

Speculation is swirling that a so-called “Mar-a-Lago Accord” aimed at supporting not only the Japanese yen but also the South Korean won in global FX markets has actually been activated, Reuters reported on the 25th (local time). The analysis is that the United States has pledged to support major Asian currencies and is now putting that pledge into practice.

Analyzing the possibility of coordinated US-Japan intervention tied to recent sharp volatility in the yen, Reuters said, “US Treasury Secretary Scott Bessent also discussed the won with South Korea’s top economic official and, very unusually, remarked that ‘the recent decline in the won’s value (a rise in the exchange rate) is not consistent with underlying economic fundamentals.’” Reuters interpreted the comment as fueling speculation over a so-called “Mar-a-Lago Accord” intended to weaken the dollar against the won and the yen.

Brent Donnelly, founder of FX analytics firm Spectra Markets, told Reuters, “Given Secretary Bessent’s comments on the won, it is not at all absurd to believe that the US and some Asian countries have agreed to stabilize or strengthen the yen, the won and the Taiwan dollar.”

In FX markets, the term “Mar-a-Lago Accord”—named after President Donald Trump’s Mar-a-Lago resort—has been used to suggest that the Trump administration is reviving the 1985 Plaza Accord, which was struck to curb dollar strength. The speculation is that the US Treasury may have tacitly agreed with key Asian allies such as Japan, South Korea and Taiwan to restrain the strong dollar and prop up their currencies through policy actions.

The reason the Mar-a-Lago Accord narrative is gaining traction is that the interests of the US and its Asian allies are seen as aligning. For the Trump administration, which is calling for a revival of manufacturing, a strong dollar undermines US export competitiveness and widens the trade deficit. For Asian economies, a sharp surge in exchange rates drives up import costs, stoking domestic inflation pressures and raising concerns about deteriorating public sentiment.

If multilateral coordinated intervention by the US, Japan, South Korea and Taiwan were to materialize, it would mark the first such FX-market intervention in 15 years since the Group of Seven (G7) acted jointly after the 2011 Great East Japan Earthquake. Back then it was “yen-selling” to cap yen strength; this time it is expected to be “buying Asian currencies” to rein in dollar strength.

Earlier this month, Japan’s Finance Minister Satsuki Katayama met with Secretary Bessent and shared concerns about the yen’s “one-sided weakness.” After Bessent went on to mention the South Korean won specifically, markets have come to believe that a concrete action plan to shore up major Asian currencies may already have been struck behind the scenes.

In particular, Japanese Prime Minister Sanae Takaichi is desperate to defend the exchange rate with an early general election just next month. At a ruling-party leadership debate on the 25th, without naming specific markets, Takaichi effectively signaled intervention as a foregone conclusion, saying, “We will take all necessary measures against speculative and highly abnormal moves.”

The yen recently surged to 159.23 per dollar. The currency was near its record low set in 2024. But on the prospect of coordinated US-Japan intervention, the rate fell to the low 155s, with the yen strengthening sharply.

In the New York FX market, news emerged on the 24th that US and Japanese authorities had conducted a “rate check”—asking commercial banks about exchange-rate levels—sending the yen up as much as 1.75% and underscoring heightened volatility. A rate check is typically a strong warning tool deployed immediately ahead of actual intervention. Traders are taking it as a precursor to coordinated US-Japan action.

Ko Jeong-sam, Hankyung.com reporter jsk@hankyung.com