Washington: Japan and the United States have confirmed a rare coordinated intervention in currency markets to support the Japanese yen after it weakened to its lowest level in nearly 40 years.
The move, announced by Japan’s Ministry of Finance and backed by the US Treasury Department, aims to curb excessive volatility and restore stability to global financial markets. The announcement followed remarks by US President Donald Trump, who said Washington was assisting Japan as a gesture of friendship and to support the global economy.
The coordinated intervention had an immediate impact on currency markets. The yen surged by as much as 1.4 percent to 155.20 against the US dollar, reaching its strongest level in nearly three months. The currency also extended gains from the previous two trading sessions, climbing a combined 3.8 percent, while strengthening against other major currencies including the euro and the British pound.
On Friday 31st, July (U.S. Eastern Time), Japan’s Ministry of Finance purchased the Japanese yen in coordination with the U.S. Department of the Treasury.
This joint action was taken pursuant to the U.S.-Japan Finance Ministers’ Joint Statement issued in September 2025 and…
— 財務省 (@MOF_Japan) August 2, 2026
The stronger yen weighed on the US dollar, allowing the euro to rise to a six-week high and sterling to trade near a two-week peak. However, Japan’s stock market reacted negatively, with the Nikkei index falling sharply as a stronger domestic currency raised concerns about the earnings outlook for export-oriented companies.
Japan’s Finance Ministry said the joint intervention was designed to counter excessive volatility and disorderly movements in the yen, adding that authorities remain in close contact with the US Treasury and are prepared to intervene again if necessary.
The operation marks the first coordinated yen intervention by Japan and the United States since 2011, when both countries acted together following the devastating earthquake and tsunami in eastern Japan. Market estimates suggest Japan may have spent nearly $59 billion buying yen during an earlier intervention in New York trading before the officially confirmed joint action.
US Treasury Secretary Scott Bessent also reaffirmed Washington’s willingness to participate in future interventions if required and reiterated support for additional interest rate increases by the Bank of Japan. The Bank of Japan, while leaving its benchmark interest rate unchanged at its latest policy meeting, signalled that another rate hike could come sooner than previously expected.
Analysts believe tighter monetary policy, combined with coordinated intervention, could provide stronger support for the yen. Japan has struggled for months with a rapidly weakening currency that has increased import costs, fuelled inflation and added pressure on household budgets. The currency’s prolonged decline has also weighed on the popularity of Prime Minister Sanae Takaichi’s government.
The coordinated action also reflects broader regional efforts to stabilise Asian currencies. South Korea recently intervened to support the won amid growing concerns over currency market volatility. Economists say the joint intervention demonstrates a strong commitment by Tokyo and Washington to prevent wider financial market disruptions and reduce the risk of spillover effects on global bond and currency markets.
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