Japan, US Confirm Rare Joint Forex Intervention

Japan and the United States have confirmed a rare, coordinated yen-buying intervention to halt the Japanese currency’s slide to 40-year lows, marking the first joint currency action between the two allies in 15 years. Both governments have signaled they stand ready to take further coordinated action if needed.

Japan’s Finance Minister Satsuki Katayama announced on Monday that Tokyo and Washington jointly intervened in foreign exchange markets on July 31 during New York trading, the first such coordinated action since 2011. The intervention was conducted pursuant to the U.S.-Japan Finance Ministers’ Joint Statement issued in September 2025, according to Xinhua.

A Historic Joint Move

The coordinated action is historically significant on multiple fronts. It marks the first Japan-US joint currency intervention since 2011, when G7 countries coordinated to weaken the yen following the devastating earthquake and tsunami that struck eastern Japan. More notably, it is the first time Washington has directly helped purchase yen to strengthen the currency since 1998, according to BBC News.

The intervention came after the yen plunged to 163.99 against the US dollar on July 23, its weakest level in approximately 40 years. The currency’s relentless decline had been driven by Japan’s much lower interest rates compared to the US, with the Bank of Japan’s benchmark rate at 1% versus the Federal Reserve’s 3.50%-3.75% range, making the yen less attractive to international investors.

Market Impact and Scale

The intervention triggered a sharp rally in the yen. Following the announcement, the currency surged more than 1% to 155.20 per dollar, its strongest level since early May, as traders remained on high alert for further action, Al Jazeera reported.

Bank of Japan data indicated that Tokyo may have sold approximately $59 billion of US dollars to buy yen during Thursday’s initial intervention in New York markets. US Treasury Secretary Scott Bessent’s handwritten note, photographed during a cabinet meeting, revealed the US planned to buy between $5 billion and $10 billion worth of yen, according to Reuters via Yahoo Finance.

“The joint intervention is the culmination of Japan’s alliance with the United States,” Japan’s top currency diplomat Atsushi Mimura told reporters on Monday. “We will continue to align (currency policy) with the Bank of Japan’s monetary policy.”

Both Sides Signal Further Action

Both governments have made clear they are prepared to intervene again. “The Japanese Ministry of Finance remains attentive and in close communication with our counterparts at the U.S. Treasury. We will not hesitate to conduct a further joint intervention,” Katayama said in a statement.

Bessent echoed the sentiment, stating that Washington “will not hesitate to participate in further joint intervention.” He added, “We strongly support Japan’s decisive market and monetary steps to correct the substantial undervaluation of the yen,” repeating his calls for further interest rate hikes by the Bank of Japan.

US President Donald Trump framed the intervention as an act of friendship. “They have a weakening yen, and they wanted a little bit of help. And we’re always there for Japan,” Trump told reporters on Sunday, describing the operation as producing a “financial benefit” for the US and being “good for the world economy,” as reported by RT News.

The US Treasury had informed banks through the Federal Reserve Bank of New York that it might intervene in the yen market and told them to “stand ready for future action,” according to ZeroHedge. The notice to banks came a day after Japanese authorities first stepped in to prop up the currency.

Treasury Market Spillover

The intervention has had significant ripple effects on US government debt markets. The operation coincided with a sharp selloff in US Treasuries, strongly indicating that Japan unloaded part of its enormous Treasury portfolio to finance the yen purchases. The benchmark 10-year Treasury yield jumped more than 9 basis points on Friday to 4.735%, its highest level since 2023, while the 30-year yield reached 5.265% — a level not seen since the 2007 financial crisis.

Japan remains Washington’s largest foreign creditor, with Japanese investors holding approximately $1.143 trillion in US government debt in May 2026, down almost $67 billion from April, according to the latest available Treasury Department figures.

Analysis: A Strategic and Economic Shift

The US participation marks a significant policy shift. The US Treasury has traditionally been reluctant to intervene in currency markets, preferring to let markets determine exchange rates. Its willingness to participate signals deep concern about the global economic implications of the yen’s collapse.

“The United States agreed to participate in the coordinated intervention because it serves its national interests by offering the prospect of significant benefits at a low cost,” Shigeto Nagai, head of Japan economics at Oxford Economics, told the BBC. The two countries are expected to continue to intervene “intermittently in a coordinated manner for some time,” he added. “Even if the actual amount of intervention is not particularly large, the prolonged sense of vigilance regarding intervention will be effective in deterring speculators.”

Analysts note that the intervention is a short-term measure. “Recent yen weakness mainly reflects market concerns about Japan’s fiscal expansion and the Bank of Japan’s delayed monetary policy response,” said Harumi Rokusha, chief economist at Mitsubishi UFJ Morgan Stanley Securities. “Forex intervention is a short-term response measure; to stabilize the yen, adjustments to fiscal and monetary policy are still needed.”

The intervention also puts pressure on the Bank of Japan to follow through with rate hikes, potentially as early as its September policy meeting. Bessent has repeatedly called for higher Japanese interest rates, and the BOJ last week offered its most explicit signal to date of an early rate hike.

Regional Coordination

In a sign of broader policy coordination, South Korea also stepped in to buy its won currency on Thursday, indicating a regional effort to stabilize Asian currencies. The yen’s rapid appreciation also weighed on Japanese equities, with the Nikkei share average tumbling as the stronger currency pressured export-oriented stocks.

What to Watch

As markets digest this historic intervention, several questions remain: What was the total combined size of the Japan-US operation? Will the Bank of Japan raise rates at its September meeting? How long will the coordinated intervention strategy continue? And what impact will Japan’s Treasury selling have on US bond markets?

Both governments have made their position clear: they will not hesitate to act again. With the yen now trading well off its lows and both Tokyo and Washington signaling continued vigilance, the intervention marks a new chapter in Japan-US economic coordination — one that could have lasting implications for global currency and bond markets.