Japan and the United States launched a joint foreign exchange intervention last week to curb the sharp depreciation of the Japanese yen after the currency hit a fresh 40-year low, according to confirmed statements from the Japanese Ministry of Finance and U.S. officials. The coordinated action marks the first time the two nations have intervened together since 2011, when authorities acted to weaken the yen following the Great East Japan Earthquake and tsunami, as reported by the BBC.
Coordinated Intervention and Market Impact
According to data from the Bank of Japan, Tokyo likely sold nearly 59 млрд. долара to buy yen during market operations in New York on a Thursday, preceding the confirmed joint intervention with Washington the following day. While the U.S. government did not officially disclose the exact scale of its financial contribution, a Reuters photograph capturing a notepad belonging to U.S. Treasury Secretary Scott Bessent during a cabinet meeting on Friday displayed the written note: “Finished: Bought Japanese yen 5-10 млрд. долара.” U.S. President Donald Trump told reporters on Sunday that Japan sought assistance with its weakening currency, noting that the U.S. is always available to help.
Economic Drivers Behind the Weak Yen
The Japanese yen remains historically weak primarily because Japan maintains significantly lower central bank interest rates compared to other major economies like the United States, making the currency less appealing to international investors. The Bank of Japan raised its main interest rate to 1% in June, marking the highest level since September 1995. By contrast, the Federal Reserve’s reference interest rate sits in a range of 3,50% до 3,75%. Furthermore, Japan continues to grapple with a decades-long decline in its working-age population, low productivity, and a heavy reliance on energy imports priced in U.S. dollars.
Future Outlook and Speculation Deterrence
Both the Japanese Ministry of Finance and U.S. Treasury Secretary Scott Bessent stated that their respective governments will not hesitate to conduct further joint actions if necessary. Shigeto Nagai, head of Japan economics at Oxford Economics, noted that the U.S. agreed to participate because the move serves national interests by offering significant potential benefits at low costs. Nagai added that even if the actual volume of intervention remains moderate, a sustained posture of vigilance acts as an effective deterrent against market speculators. Following comments from President Trump, the U.S. dollar dipped 0.2% to 157.07 yen—down from a 40-year peak of 164 yen reached the previous month—though it later ticked back up to 157.70 yen following statements from Tokyo.
Did you know? The last time the U.S. and Japan coordinated a foreign exchange market intervention prior to last week was in 2011, following the devastating earthquake and tsunami in eastern Japan, when the goal was actually to weaken an overly strong yen.
Frequently Asked Questions
Why did the U.S. and Japan intervene in the currency markets?
According to the Japanese Ministry of Finance and U.S. Treasury officials, the joint intervention was designed to counteract excessive volatility and chaotic fluctuations in the Japanese yen, aiming to prevent a broader sell-off that could disrupt the global economy and potentially raise borrowing costs for Washington.
How much money did Tokyo spend to support the yen?
Data from the Bank of Japan indicates that Tokyo likely sold close to 59 млрд. долара to purchase yen during market operations in New York prior to the joint announcement with the United States.
What are the primary reasons for the weak yen?
The yen has dropped to historic lows largely because Japan maintains significantly lower interest rates than the United States and other major economies, alongside domestic structural challenges including a declining workforce and high energy import costs.
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