US and Japan Conduct Rare Joint Yen Intervention

The United States and Japan executed a coordinated foreign exchange intervention between July 31 and August 1, 2026, to stabilize the Japanese yen after it plummeted to 40-year lows near 164 per dollar. This marked the first joint action to support the yen since 2011, and the first U.S. intervention of any kind in the yen market since 1998. The operation drove the currency upward, reaching as high as 155.20 per dollar by August 3.

To support the effort without weakening the U.S. dollar, Treasury Secretary Scott Bessent directed the U.S. Treasury to sell euro reserves to purchase yen. Japan's Ministry of Finance conducted massive yen-buying operations, with some estimates suggesting Tokyo spent between $52.8 billion and $89 billion. To prevent Japan from selling its $1.1 trillion stockpile of U.S. Treasuries to fund these actions—which would spike U.S. borrowing costs—the U.S. encouraged Japan to use the Federal Reserve's Foreign and International Monetary Authorities (FIMA) Repo Facility to obtain dollar liquidity using bonds as collateral.

President Donald Trump characterized the move as a "signal of friendship" and a benefit to the global economy. Meanwhile, the Bank of Japan maintained its short-term interest rate at 1% on July 31 but signaled potential hikes in September to combat inflation. The intervention caused a sharp decline in the Nikkei 225 index on August 3, as a stronger yen pressured Japanese exporters. Both nations have pledged they will not hesitate to conduct further joint interventions if market volatility persists.