Japan Spends $64 Billion to Stabilize Yen Amid Iran Conflict

The Government of Japan spent approximately 10 trillion yen (roughly $64 billion) in currency interventions starting April 30, 2026, to arrest a steep decline in the yen. The currency had plummeted to over 160 yen per U.S. dollar, its lowest level in nearly two years, driven by wide interest rate differentials with the U.S. and an energy crisis resulting from the war with Iran. Initial interventions on April 30 and May 1, estimated at $35 billion, triggered a brief rally that brought the currency back toward the 157 range.

Finance Minister Satsuki Katayama issued several warnings against speculative moves, threatening "decisive measures" in accordance with a joint statement signed with the United States. Despite these actions, the yen remained volatile, experiencing a brief spike on May 4 that sparked further speculation of government activity. While the Bank of Japan signaled potential interest rate hikes as early as June to combat inflation, Prime Minister Sanae Takaichi continued to support a loose monetary policy to boost growth.

Global markets remained unstable as President Donald Trump rejected Iranian peace proposals and warned that blockades of Iranian ports could last for months. This instability kept oil prices elevated due to the effective closure of the Strait of Hormuz. To coordinate a long-term response, U.S. Treasury Secretary Scott Bessent scheduled a visit to Japan to meet with Japanese leadership and potentially provide an explicit U.S. endorsement of Tokyo's market interventions.