U.S., Japan Stage First Coordinated Yen Support Operation Since 1998
The United States and Japan have conducted a rare coordinated foreign-exchange intervention to bolster the yen after it slid to near a 40-year low against the dollar.
President Donald Trump said the U.S. Treasury assisted Japan in stabilizing the currency last week, marking the first joint U.S.-Japan effort to strengthen the yen since 1998. Japan’s Finance Minister Satsuki Katayama said the operation was aimed at curbing “excessive volatility and disorderly movements” in the market.
Before the action, the yen weakened past 163 per dollar. It later rebounded toward 155. Trump described the step as support for the Japanese currency given the close bilateral relationship, calling it a “signal of friendship” with Tokyo.
Treasury Secretary Scott Bessent said Friday’s coordinated move “countered disorderly yen movements,” adding that Washington “will not hesitate” to join further joint interventions if needed.
Yen losses have accelerated this year as investors focused on Japan’s fiscal spending, higher energy-import costs and the wide interest-rate gap with the United States. The stronger dollar has also weighed on several Asian currencies. Japan is reported to have spent about $34 billion last week to support the yen.
After the joint action, the yen erased roughly three months of declines, though analysts cautioned that intervention alone may not change the broader trend. A weaker yen boosts exporters by making Japanese goods cheaper overseas, but it also lifts import costs — especially for dollar-priced energy — adding pressure to households and businesses.
The currency’s slide has also complicated Japan’s inflation outlook as the Bank of Japan weighs additional rate increases. Bessent said the U.S. strongly supports Japan’s market and monetary measures to address what he called the yen’s “substantial undervaluation.” He also said the FIMA Repo Facility remains an important backstop and should be expanded.
The intervention took place around the BOJ’s latest policy meeting, where the central bank kept interest rates unchanged at 1% while signaling further hikes remain possible. The BOJ raised rates in June after years of ultra-low borrowing costs, and many analysts expect another increase before year-end if inflation and yen weakness persist.
Higher Japanese rates could ease pressure on the yen by narrowing the gap with U.S. yields. At the same time, rising domestic yields could draw Japanese capital away from U.S. Treasuries, potentially lifting U.S. borrowing costs.
Speculators have stepped up bearish positioning on the yen, with short bets near levels last seen around the global financial crisis. That backdrop could leave yen pairs vulnerable to abrupt moves if authorities intervene again. Wells Fargo analysts wrote that the latest operation reflects stronger official resolve to defend the currency while also underscoring the limits of relying on FX action alone.
