What happened
Japan and the US have confirmed that they carried out a rare joint intervention last week to stop the yen from sliding, after the currency fell to a fresh 40-year low. It is the first coordinated action of its kind since 2011.
Why it matters for the market
Japan's Ministry of Finance and US Treasury Secretary Scott Bessent both said they would not hesitate to intervene jointly again. The move underlines efforts to prevent a sell-off in the yen and Japanese government bonds from spilling over into the global economy, including potentially pushing up Washington's borrowing costs.
Bank of Japan data suggests Tokyo may have sold nearly $59bn of dollars to buy yen in New York on Thursday, ahead of Friday's confirmed joint action. The US has not disclosed its own participation size, though a Reuters photograph of a notepad in front of Bessent during a cabinet meeting read "To Do: Buy Japanese Yen $5-10 bil".
"The United States agreed to participate because it serves its national interests by offering the prospect of significant benefits at a low cost," said Shigeto Nagai, head of Japan economics at Oxford Economics. He expects the two countries to continue intervening "intermittently in a coordinated manner," with the prolonged vigilance deterring speculators even if actual amounts are not large.
The yen has been historically weak because Japan's central bank rates are far lower than in other major economies, making the currency less attractive. The Bank of Japan last raised rates in June to 1%, the highest since September 1995, while the Fed's benchmark is 3.50%-3.75%. Japan also faces a shrinking workforce, low productivity, and heavy reliance on dollar-priced energy imports.
Japan's finance ministry said Friday's intervention "countered excessive volatility and disorderly movements" in the yen. Bessent echoed that, saying the coordinated actions corrected a "substantial undervaluation" of the yen. President Trump said the US was "always there for Japan" as it sought help with the weak yen.
What traders should watch
The dollar slipped 0.2% to 157.07 yen after Trump's comments, well below last month's 40-year high of 164, but later recovered to 157.70 after the finance ministry's statement. The episode highlights how currency intervention and its aftermath can create intraday volatility across markets.
