Japan and US launch first joint yen intervention since 2011 to halt slide to 40-year low

Joint action after 15 years

Japanese Finance Minister Satsuki Katayama will announce on Monday that Tokyo and Washington have taken joint action in the currency market to arrest the yen's slide, two Japanese government officials told Reuters on Sunday. One of the sources, asked if Katayama would describe the operation as "joint action," replied yes and added, "The operation is still ongoing." Reuters said the move would mark the first coordinated intervention by the two countries since 2011, when the G7 acted together after the Tohoku earthquake to weaken a yen that had become excessively strong, the opposite of the present aim. Neither the finance ministry nor the US Treasury has confirmed the joint operation, and the only report that the United States actually bought yen, through the New York Federal Reserve on the Treasury's behalf, comes from the Financial Times. The intervention seeks to lift the yen from its lowest level against the dollar since 1986. The yen has been under sustained pressure as the interest rate gap between Japan and the United States widened, with the Federal Reserve adopting a more hawkish stance while the BOJ held its policy rate at 1.0%.

Scale of the intervention

Market sources said Japanese and US authorities bought yen on Thursday and Friday. Reuters reported that Tokyo may have sold as much as $58.97 billion to support the currency during the New York session on Thursday. The figure is an estimate derived from the Bank of Japan's projection of money market conditions, which pointed to an unusually large net outflow, and analysts read the same data differently: Bloomberg put the operation at about 8.45 trillion yen, or roughly $53 billion. Official Ministry of Finance figures are not due for about a month. Either reading would be a record for a single session, against a previous high of 5.92 trillion yen in April 2024. The yen surged again on Friday shortly after BOJ Governor Kazuo Ueda held a press conference on the central bank's decision to hold policy steady, a move markets suspect was another round of yen-buying by Japanese authorities. The BOJ held its rate at 1.0% by a vote of 8 to 1, with Hajime Takata dissenting in favour of 1.25%, and raised its growth forecast for the current fiscal year. Ueda was read as keeping a September increase in play without pre-committing, a shift that could narrow the yield gap and ease pressure on the yen.

US role and Bessent's notepad

US Treasury Secretary Scott Bessent had said last week that the yen "seems very undervalued to me." On Friday, a Reuters photograph showed a notepad at a cabinet meeting with the handwritten words "To Do" followed by "Buy Japanese Yen (JPY) $5-10 bil." The same day, the Treasury informed several banks that it might intervene in the yen market and that they should "stand ready for future action," a source familiar with the matter said. The notepad and the direct communication with banks reflected the unusual level of US involvement in what is typically a Japanese-led effort.

Market and analyst reaction

Some analysts cited by Reuters said the signals of cooperation between Japan and the US are driven by Washington's concern over rising Treasury yields. That situation could worsen if Tokyo failed to prevent a massive sell-off of the yen and Japanese government bonds. The yen's slide to a 40-year low has raised fears of imported inflation in Japan and potential spillovers into global bond markets. The joint intervention, while rare, is seen as a signal that both governments are willing to act decisively to stabilize the currency.

What happens next

Katayama's announcement on Monday is expected to stress the two countries' determination to combat what they consider excessive yen declines. The Ministry of Finance and the US Treasury did not immediately respond to requests for comment on Sunday. The operation remains active, according to the officials, and markets will watch for further rounds of intervention. The BOJ's next policy meeting and any actual rate hike will be critical in determining whether the yen can sustain its recovery.