In a rare coordinated intervention, the United States and Japan moved together last week to stem a sharp decline in the yen, the currency’s weakest level in four decades.
Japan’s Ministry of Finance announced it sold about $59 bn of dollars in New York markets on Thursday, before the confirmed joint action with Washington on Friday. The United States Treasury, thanks to a newly‑created “To Do” list in a Cabinet meeting, aimed to purchase between $5 bn and $10 bn of yen.
Officials from both countries stated they will not hesitate to repeat such cooperation in the future, underscoring the importance of keeping the yen stable to avoid disorderly market waves that could elevate borrowing costs globally.
Bank of Japan data show the yen’s weakness is largely driven by a monetary policy gap, with Japanese policy rates hovering near zero while U.S. Federal Reserve rates sit above 3.5 %. The yen’s prolonged under‑valuation also reflects low productivity, aging demographics, and heavy reliance on dollar‑priced energy imports.
The joint action was a clear signal that the United States will back Japan’s decisive market moves to correct the yen’s undervaluation, a stance echoed in social media posts from Treasury Secretary Scott Bessent and President Donald Trump.
Following the intervention, the yen moved from a 40‑year low of 164 to 157.07, then retraced slightly back to 157.70, showing volatility as markets adjusted.
Industry analysts suggest that regular, albeit intermittent, coordinated interventions could serve as a deterrent for speculative attacks, maintaining market confidence in both economies’ currency policies.
