Japan and the United States intervened in currency markets on Thursday to support the yen as it approached a 40-year low against the dollar, marking a coordinated effort that pushed the currency to its strongest level in two months. Japan’s government conducted yen-buying, dollar-selling intervention in New York, its first such action in three months, while U.S. authorities executed “rate checks”—preliminary signals often seen as precursors to direct intervention—according to market participants and officials.
The yen surged as much as 3.3% in response, reaching 157.8 per dollar at one point on Thursday before settling higher on Friday. This came after the currency had slumped to around 163 per dollar earlier in July, its weakest level since 1986, driven by a wide interest-rate gap between the U.S. and Japan and mounting import costs from energy prices tied to the Iran war.
Japan’s top currency diplomat, Atsushi Mimura, confirmed the coordination without directly acknowledging the intervention. “We are receiving support from the United States that goes beyond psychological support, and I’m constantly in contact with relevant authorities,” Mimura told reporters on Friday. When asked whether U.S. support included rate checks, he said it “would include that as well.”
U.S. Treasury Secretary Scott Bessent acknowledged Japan’s move on Thursday, saying the yen “seems very undervalued to me.” The Bloomberg news organization estimated Japan’s intervention at around $53 billion based on market data. South Korea also conducted dollar-selling intervention the same day, sending its won to a nine-month high, suggesting a broader regional effort to counter currency weakness.
The intervention comes as Japan grapples with the impact of yen weakness on its economy. A weak currency raises import costs for energy and raw materials, pressuring household budgets already strained by inflation. Japan spent a record 11.7 trillion yen (approximately $73 billion) on currency intervention between late April and early May this year, but the brief boost to the yen was quickly erased as the currency resumed its downtrend.
The timing of Thursday’s action was significant: it occurred just before the Bank of Japan’s policy decision on Friday, where the central bank was widely expected to hold interest rates steady at 1% but signal readiness to raise them further. Markets have been on alert for yen-buying by Japanese authorities for months, with Finance Minister Satsuki Katayama repeatedly warning of “decisive” action. However, her well-telegraphed messaging in previous rounds allowed speculators to unwind short yen positions in advance, blunting the impact. This time, the government deliberately kept its communication quieter to catch markets off guard.
The U.S. Treasury’s involvement reflects Washington’s interest in supporting the yen while also pressing Japan’s central bank to raise interest rates further. In a semi-annual currency report released earlier in July, the U.S. Treasury warned that yen weakness has persisted despite narrowing U.S.-Japan interest rate differentials and called for additional BOJ rate hikes to combat inflation that has strained households’ purchasing power.
Sources
- Reuters — Japan’s yen-buying intervention details, U.S. rate checks, and Mimura’s statements on coordination
- Bloomberg — Estimated intervention scale of $53 billion and U.S.-Japan coordination assessment
- Nikkei Asia — Confirmation of Thursday’s intervention and U.S. rate check execution
- U.S. Treasury semi-annual currency report — Policy stance on yen weakness and BOJ rate hike calls
