The Japanese yen has advanced sharply, leading to increased vigilance among traders for additional intervention measures by authorities. This comes after Japan and the U.S. confirmed coordinated operations to strengthen the yen, with the most recent joint yen-buying operation since 1998 occurring last month. Despite these efforts, the yen has surrendered most of its gains and remains more than 1% down year-to-date, indicating persistent underlying imbalances.
Japanese and U.S. officials conducted their first joint currency intervention since 2011 in late July, specifically on July 30 and 31. This action was triggered as the yen approached a 40-year low near ¥164 per dollar. Japan's intervention spending has been substantial, with a record ¥15.39 trillion ($36 billion) spent on yen purchases in July and August 2026 alone, surpassing previous annual records. Earlier interventions in April and May 2026 also cost ¥11.7 trillion ($73 billion).
U.S. Treasury Secretary Scott Bessent has expressed support for Japan's actions and hinted at further measures to strengthen the yen, stating his belief that the Japanese government and the Bank of Japan (BOJ) will take steps toward a stronger currency. This includes the possibility of the BOJ raising interest rates, a move that some analysts believe has already been priced into the market. BOJ Governor Kazuo Ueda has also indicated that a rate hike could occur later this month, with the next policy meeting scheduled for September 17 and 18. Oxford Economics anticipates multiple interest rate hikes, projecting the central bank's policy rate to reach 1.75% by April, a faster pace than previously expected, driven by pressure on the yen and rising inflation expectations.
