Reuters reported on Sunday that speculation is growing about the so-called “Mar-a-Lago Agreement,” which reportedly supports not only the Japanese yen but also the South Korean won in the global foreign exchange market. Analysts suggest that the U.S. has pledged to support major Asian currencies, including the yen, won, and Taiwanese dollar, and is actively implementing this support.
The report highlighted that U.S. Treasury Secretary Scott Bessent discussed the South Korean won with South Korea’s economic leaders amid recent volatility in the yen’s exchange rate. In an unusual move, he stated that the recent decline in the won’s value doesn’t align with fundamental economic conditions. Reuters interpreted this as fueling speculation about the Mar-a-Lago Agreement, which aims to weaken the dollar against the won and yen.
Brent Donnelly, founder of foreign exchange analysis firm Spectra Markets, told Reuters that, given Secretary Bessent’s comments on the won, it was quite plausible that the United States and some Asian countries had agreed to stabilize or strengthen the values of the yen, the won, and the Taiwanese dollar.
In forex circles, the Mar-a-Lago Agreement is seen as a revival of the 1985 Plaza Accord, which was designed to weaken the dollar. Speculation suggests that the U.S. Treasury may have tacitly agreed with key Asian allies to suppress dollar strength and artificially boost their currencies’ values.
The Mar-a-Lago Agreement gains traction due to aligned interests between the U.S. and its Asian allies. The Trump administration, pushing for a manufacturing revival, recognizes that a strong dollar hurts U.S. export competitiveness and worsens trade deficits. Asian countries fear that rapidly depreciating currencies could spark inflation and public discontent due to soaring import prices.
If a multilateral intervention involving the U.S., Japan, South Korea, and Taiwan materializes, it would mark a historic forex market intervention, the first since the G7’s coordinated action during the 2011 Great East Japan Earthquake. While that intervention aimed to sell yen, this time it’s expected to involve buying Asian currencies to counter dollar strength.
Earlier this month, Japanese Finance Minister Satsuki Katayama met with Secretary Bessent to voice concerns about the yen’s one-sided weakness. Bessent’s subsequent mention of the South Korean won has led market observers to believe that a concrete plan to support major Asian currencies has been agreed upon behind closed doors.
Japanese Prime Minister Sanae Takaichi urgently needs to defend the exchange rate ahead of next month’s snap election. During a party leader debate on Sunday, she hinted at market intervention, stating that the government would take all necessary measures against speculative and highly abnormal movements, without specifying particular markets.
The yen’s exchange rate recently approached the critical intervention threshold of 160 JPY to the dollar. However, news of the New York Federal Reserve conducting a rate check on Friday brought it down to the low 155 JPY range. A rate check, where authorities inquire about current exchange rates from commercial banks, typically serves as a strong warning before actual intervention. Traders view this as a precursor to U.S.-Japan joint intervention.
On Monday, Asian markets are bracing for extreme volatility amid low liquidity due to Australia’s public holiday. Short-sellers betting on the yen’s decline now face significant losses in light of the New York Fed’s rate check and Prime Minister Takaichi’s strong warnings.