Japan and the U.S. confirmed a joint intervention in the currency market on Friday, marking the first such coordinated action since 2011. This move aims to counter the yen's slide, which had pushed it to fresh 40-year lows against the dollar. The intervention follows a period of concern from Japanese authorities and comes after the U.S. Treasury Secretary Scott Bessent had publicly stated that the yen "seems very undervalued." A photo from a Cabinet meeting even showed Bessent's handwritten note to "Buy Japanese Yen (JPY) $5-10 bil," indicating the U.S. commitment to the effort. While the exact amount of the U.S. intervention was not fully disclosed, Bank of Japan data suggested Japan may have sold as much as $58.97 billion to buy yen in New York markets on Thursday, with another suspected intervention on Friday.
The coordinated action has put bearish bets against the yen at risk of an unwind. Japan's finance ministry and top currency diplomat, Atsushi Mimura, emphasized their readiness for further action, stating they would "not hesitate to participate in further joint intervention." U.S. Treasury Secretary Bessent echoed this sentiment. This joint effort also signals closer policy coordination, with the Bank of Japan offering its most explicit signal yet of an early rate hike, even after keeping monetary policy steady last week. This follows previous interventions by Japan in April and May, which only provided a brief rebound for the yen, and a June rate hike by the BOJ that also failed to give the currency a lasting boost.
The intervention immediately impacted the market, with the dollar falling 0.6% against the yen to an intraday low of 156.50 in Asian morning trading on Monday after the confirmations. President Donald Trump also publicly supported the intervention, stating, "They have a weakening yen, and they wanted a little bit of help. And we're always there for Japan." The finance ministry clarified that Friday's yen-buying intervention with the U.S. Treasury Department "countered excessive volatility and disorderly movements in the Japanese yen in recent months," underscoring both countries' resolve to prevent further depreciation from causing global instability. The U.S. also acknowledged the potential for the intervention to add upward pressure on already rising U.S. Treasury yields, but maintained its support for Japan's decisive market and monetary steps.
