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// DOSSIER — us-japan-joint-currency-intervention-yen
US and Japan Conduct Historic Joint Currency Intervention to Support Undervalued Yen
REL_TIME: 04 Aug 2026 06:27Z · LANG: EN
In a historic and rare coordinated effort, the United States Treasury joined forces with Japan's Finance Ministry on July 31, 2026, to intervene in the foreign exchange market and prop up the Japanese yen, which had languished near 40-year lows. Marking the first joint intervention to strengthen the yen since 1998, the action saw the Federal Reserve Bank of New York sell euros to buy yen on behalf of the US Treasury, following a massive solo intervention by Tokyo the previous day. US Treasury Secretary Scott Bessent, who previously labeled the yen "very undervalued," was photographed with a notepad planning a $5 billion to $10 billion yen purchase. The joint action successfully pushed the yen from over 163 per dollar down to the 157 range, aiming to curb excessive volatility, ease Japanese import inflation, and protect US Treasury markets from spillover risks.
// Background
The Japanese yen has faced severe downward pressure throughout 2026 due to a wide interest rate gap between the Federal Reserve and the Bank of Japan (BOJ), high global energy prices, and persistent Japanese budget deficits. While the BOJ raised interest rates to 1% in June 2026, real borrowing costs remained deeply negative compared to the US. This depreciation fueled domestic inflation in Japan by raising import costs, while threatening US markets with bond volatility and trade imbalances. The last time the US directly supported the yen was in 2011 as part of a G7 effort post-earthquake, but the last bilateral joint intervention to actively strengthen the yen occurred in 1998.
// Key Developments
- The US Treasury and Japan's Finance Ministry executed their first coordinated currency intervention to support the yen since 1998.
- The Federal Reserve Bank of New York sold euros to buy yen through Goldman Sachs and Morgan Stanley on behalf of the US Treasury.
- US Treasury Secretary Scott Bessent's handwritten notepad at Camp David revealed a "To Do" list item to "Buy Japanese Yen (JPY) $5-10 bil".
- The intervention successfully rallied the yen from a near 40-year low of over 163 per dollar to around 157.40 by the close of New York trading on July 31, 2026.
- US involvement was driven by fears of Japanese bond market volatility spilling into US Treasuries and the risk of Tokyo selling US debt to fund solo interventions.
// Timeline
-
Preparations and approximately 10 rounds of bilateral discussions begin between US and Japanese officials regarding currency stabilization.
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US Treasury Secretary Bessent calls the yen "very undervalued" on Fox Business. Japan conducts a massive solo intervention, spending an estimated $52.8 billion to $58.97 billion to buy yen.
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The US Treasury instructs banks to stand ready. During a Camp David cabinet meeting, Bessent is photographed with notes to buy $5-10 billion in yen. The NY Fed subsequently sells euros to buy yen, driving the currency to 157.40.
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Media outlets report details of the joint US-Japan intervention, and Japan's Finance Ministry highlights its readiness to use the Fed's FIMA repo facility.
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Japan's Finance Ministry, President Trump, and Secretary Bessent formally confirm the coordinated intervention and signal readiness for future joint actions if necessary.
// Perspectives
[United States (Treasury & President Trump)]
Supportive of joint intervention to prevent disorderly currency movements, protect US Treasury markets from spillover, and signal bilateral friendship.
[Japan (Finance Ministry & Bank of Japan)]
Highly appreciative of US coordination, actively utilizing multiple tools including the FIMA repo facility to maintain liquidity and combat speculative yen selling.
[Market Analysts (e.g., Evercore ISI, Sumitomo Mitsui Trust Bank)]
Skeptical of long-term efficacy without backing from interest rate differentials, though acknowledging that coordination makes speculative shorting of the yen far riskier.
// Quotes
“I was in the currency business for 40 years, and the Japanese yen seems very undervalued to me. The currency is very cheap. The economy is doing well.”
“They wanted a little bit of help, and we're always there for Japan... More than anything else, it was a signal of friendship.”
“Friday's coordinated foreign exchange actions countered disorderly yen movements... We will not hesitate to participate in further joint intervention.”
