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Japan’s Ministry of Finance stated that it conducted a coordinated yen-buying intervention with the US Treasury on Friday, marking the first bilateral action of its kind in 15 years. According to Reuters, both sides indicated they will not hesitate to intervene jointly again should excessive volatility return to currency markets. The finance ministry’s announcement detailed how the operation targeted the yen’s slide to levels not seen since the early 1980s.
US Treasury Secretary Scott Bessent said that Friday’s coordinated foreign exchange actions countered disorderly yen movements. President Trump noted that the United States was providing help on the yen as a sign of friendship between the allies. Bessent expressed strong support for Japan’s decisive market and monetary steps, according to the official statement.
The joint intervention revives a mechanism last deployed in 2011 when Washington and Tokyo coordinated to weaken the yen following the earthquake and tsunami that struck eastern Japan, multiple outlets including CNBC reported. Japan has since undertaken several unilateral operations, yet securing US participation lends additional authority to the effort. Central bank records show past actions have frequently involved sales of tens of billions of dollars within compressed time frames.
Interest-rate differentials have fueled much of the yen’s prolonged weakness, with the Bank of Japan lifting its policy rate to 1 percent in June while the Federal Reserve holds its target between 3.5 and 3.75 percent. This disparity has sustained carry trades in which investors fund positions by borrowing cheaply in yen. An Oxford Economics assessment found that Japan’s shrinking population and heavy reliance on dollar-priced energy imports have intensified the resulting pressures.
The yen traded near 157 per dollar after the confirmation, having retreated from a recent high near 164. A Reuters tally placed Japan’s dollar sales during the latest operation at nearly 59 billion dollars. Reports citing officials familiar with the planning estimated the US share between 5 billion and 10 billion dollars.
Economist Shigeto Nagai of Oxford Economics told the BBC that the United States agreed to participate because the action serves its national interests by offering significant benefits at low cost. The operation also aims to limit spillover selling in Japanese government bonds that could elevate borrowing costs worldwide, including for Washington. Coordinated interventions are expected to continue intermittently for some time.
