US and Japan Conduct First Joint Currency Intervention Since 2011

The United States and Japan conducted a rare coordinated currency intervention on July 31 and August 1, 2026, to stabilize the Japanese yen after it plummeted to 40-year lows near 164 per dollar. This marks the first joint effort to support the yen since 2011. The operation involved massive yen-buying and dollar-selling, with Japan spending an estimated $52.8 billion on July 30 alone and total Japanese spending across the period reaching between $89 billion and $100 billion. To avoid appearing to weaken the U.S. dollar, the U.S. Treasury directed the Federal Reserve Bank of New York to sell euros to purchase yen.

President Donald Trump described the action as a "signal of friendship" and a benefit to the global economy. U.S. Treasury Secretary Scott Bessent noted the yen was "very undervalued" and indicated that the U.S. would not hesitate to intervene again. To prevent Japan from selling its $1.1 trillion in U.S. Treasuries to fund these interventions—which could destabilize U.S. bond yields—the U.S. expanded the Foreign and International Monetary Authorities (FIMA) Repo Facility, allowing Japan to use Treasury holdings as collateral for dollar liquidity.

The intervention drove the yen to its strongest levels since May, reaching approximately 155.20 per dollar by August 3. This surge caused a sharp decline in the Nikkei 225 index as exporters faced reduced overseas earnings. Meanwhile, the Bank of Japan maintained short-term interest rates at 1% but signaled potential hikes as early as September to combat inflation and narrow the yield gap with the U.S.