Japan and the United States have confirmed a rare, coordinated yen-buying intervention to halt the Japanese currency’s slide to 40-year lows, with Tokyo signalling a willingness to take further action if necessary.
Japanese Ministry of Finance and Donald Trump
The Japanese Ministry of Finance confirmed the joint effort following a Sunday statement by US President Donald Trump announcing that Washington was assisting to prop up the yen as a sign of friendship and to support the global economy. They have a weakening yen, and they wanted a little bit of help. And we're always there for Japan,
Trump said in response to a reporter’s query.
Nikkei Share Average
The announcement caused the yen to leap, gaining as much as 1.4 percent to hit a nearly three-month high of 155.20 per US dollar. The move added to a 3.8 percent surge over the previous two sessions and advanced the currency broadly against the euro and sterling. The aggressive yen-buying heavily pressured the US dollar, pushing the euro to a 1.5-month high of $1.1559 and sterling near a two-week top of $1.3476 during early Asian trading on Monday. Meanwhile, the rapid appreciation weighed on equity markets, causing the Nikkei share average to tumble.
According to analysts, the intervention highlights both nations’ resolve to prevent global spillovers from a sell-off in the yen and Japanese government bonds. Japan has faced a relentless drop in its currency that has increased import prices and stoked broader inflation, impacting household wallets and the approval ratings of Prime Minister Sanae Takaichi.
US Treasury Secretary Scott Bessent
Japan’s Finance Ministry stated that Friday’s intervention with the US Treasury Department countered excessive volatility and disorderly movements in recent months, adding that officials remain in close communication and will not hesitate to conduct further joint intervention.
US Treasury Secretary Scott Bessent also confirmed the effort in a statement on X, writing, We strongly support Japan's decisive market and monetary steps to correct the substantial undervaluation of the yen.
Bessent noted that Washington would not hesitate to participate in further joint actions and repeated calls for further interest rate hikes by the Bank of Japan.
The joint action marks the first time the two countries have coordinated since a 2011 effort to weaken the yen following the earthquake in eastern Japan. Bank of Japan data indicated that Tokyo may have sold as much as $58.97bn to buy yen during intervention in New York markets on Thursday, ahead of Friday’s confirmed joint steps with Washington. Alongside these developments, South Korea also stepped in to buy its won currency on Thursday.
Worth a look