US and Japan Conduct First Joint Yen Intervention Since 2011

The United States Department of the Treasury and the Government of Japan conducted a rare coordinated currency intervention on July 31 and August 1, 2026, to stabilize the Japanese yen. The currency had plummeted to 40-year lows, reaching nearly 164 per dollar, driven by a wide interest rate gap between the Federal Reserve and the Bank of Japan, as well as rising energy costs. The joint operation, the first of its kind since 2011, pushed the yen back toward 155 per dollar by Monday, August 3.

To avoid directly weakening the U.S. dollar, the U.S. Treasury sold euro reserves to purchase yen, a move coordinated with the European Central Bank. Japan's intervention scale was significant, with estimates suggesting Tokyo spent between $52.8 billion and $89 billion. To prevent Japan from liquidating its $1.1 trillion in U.S. Treasury holdings to fund these operations—which would spike U.S. borrowing costs—the U.S. provided dollar liquidity through the Federal Reserve's Foreign and International Monetary Authorities (FIMA) Repo Facility.

President Donald Trump described the action as a "signal of friendship," while Treasury Secretary Scott Bessent characterized the yen as "very undervalued." While the intervention provided immediate relief, analysts warn that long-term stability depends on the Bank of Japan raising interest rates. The Bank of Japan maintained its short-term rate at 1% on July 31 but signaled potential hikes in September to combat inflation risks. The surge in the yen's value also triggered a sharp decline in the Nikkei 225 index as export-oriented sectors faced reduced overseas earnings.