Japan and the United States confirmed on Monday a rare, coordinated intervention in foreign exchange markets to stabilize the rapidly weakening yen, marking the first joint US-Japan currency operation since 1998.
Japanese Finance Minister Satsuki Katayama announced that the Finance Ministry conducted joint yen-buying intervention with the US Treasury Department on Friday, after the yen had slid to 163.73 per dollar, its lowest level in four decades. The coordinated action pushed the dollar back to 157.57 against the yen by the close of trading on Friday.
The intervention was triggered by growing concerns that the yen’s collapse was spilling over into already strained US Treasury markets. Japanese investors had sold $29.6 billion of US government debt in the first quarter of 2026 alone, removing a historically reliable buyer from markets already navigating large fiscal deficits. Washington’s decision to join the operation was driven partly by the desire to prevent further Treasury selling by Japanese institutions.
Both governments signaled they are prepared to take additional action if needed. We will not hesitate to take further coordinated steps, Katayama said in a statement. US Treasury Secretary Scott Bessent confirmed the joint action, calling it a sign of the strong economic friendship between the two allies. President Trump described the intervention as evidence of the close ties between Washington and Tokyo.
The yen’s weakness has been driven by a wide interest rate differential between the Bank of Japan and the Federal Reserve. The BOJ has kept its policy rate well below US levels, even after recent hikes, while the yen has been battered by elevated energy import costs stemming from the Middle East conflict and persistent inflation pressures.
Analysts noted that the US participation eases concerns that Japan’s intervention could push Treasury yields higher by forcing sales of US government debt, while simultaneously helping to stabilize Japanese bond markets that have also come under pressure. JPMorgan analysts cautioned that the US Treasury has limited liquid resources to support further coordinated intervention, though its firepower could be expanded through extraordinary measures.
The intervention represents a significant escalation in global currency coordination at a time when bond markets, oil prices, and geopolitical tensions are already roiling financial systems worldwide. Currency traders are now watching closely to see whether the two governments can sustain the pressure against speculators who have been betting on further yen weakness.
Sources: CNBC Reuters Al Jazeera