Japan and the US have confirmed that they jointly intervened last week to halt a slide in the yen to a fresh 40-year low, according to BBC Business. The coordinated action is the first since 2011, when both countries took joint steps to weaken the yen after the earthquake and tsunami that hit eastern Japan. Bank of Japan data indicated that Tokyo may have sold almost $59bn of US dollars to buy yen when it intervened in New York markets on Thursday, before Friday's confirmed joint intervention with Washington.
Both Japan's finance ministry and US Treasury Secretary Scott Bessent have said they will not hesitate to conduct joint interventions in the future, BBC Business reported. The move highlights both countries' efforts to prevent a sell-off in the yen and Japanese government bonds from having an impact on the global economy, including helping to push up borrowing costs for Washington.
The Intervention and Market Reaction
On Monday, Japan's finance ministry said Friday's intervention with the US Treasury Department "countered excessive volatility and disorderly movements in the Japanese yen in recent months." The dollar fell by 0.2% to 157.07 yen after US President Donald Trump's comments on Sunday, well off the 40-year high of 164 last month, but rose back to 157.70 yen after the Japanese finance ministry's statement, according to BBC Business.
The US has not confirmed the size of its intervention. A Reuters photograph of a notepad in front of Bessent during a cabinet meeting on Friday read: "To Do: Buy Japanese Yen $5-10 bil," BBC Business reported.
Official Statements
Bessent said in a social media post that the "coordinated foreign exchange actions countered disorderly yen movements." He added: "We strongly support Japan's decisive market and monetary steps to correct the substantial undervaluation of the yen."
Trump told reporters on Sunday: "They have a weakening yen, and they wanted a little bit of help. And we're always there for Japan."
Why the Yen Is Historically Weak
The yen is historically weak mainly because Japan has much lower central bank interest rates than other major economies like the US, making the Japanese currency less attractive to international investors, according to BBC Business. The Bank of Japan last raised interest rates in June, increasing its main rate to 1% — the highest level since September 1995. In comparison, the US Federal Reserve's benchmark rate is in a range of 3.50% to 3.75%.
Japan also faces a decades-long slide in its working-age population, low productivity and a heavy reliance on energy imports that are priced in US dollars, BBC Business reported.
| Policy benchmark | Japan | United States |
|---|---|---|
| Central bank rate | 1% (Bank of Japan, last raised June) | 3.50%–3.75% (Federal Reserve) |
| Recent intervention size | ~$59bn (BoJ data, Thursday) | $5–10bn (notepad indication, unconfirmed) |
| USD/JPY level | 157.70 after finance ministry statement | 40-year high of 164 last month |
Global Borrowing and Business Implications
The joint intervention is aimed at preventing a sell-off in the yen and Japanese government bonds from affecting the global economy, including pushing up borrowing costs for Washington. For CFOs and treasury professionals, the scale of Tokyo's action — nearly $59bn in a single day's New York trading — signals the official sector's determination to stabilise the currency, according to BBC Business. The commitment by both governments to intervene again in the future adds a new layer of policy risk for companies managing yen-denominated cash flows and US dollar funding costs.
Sources:
