US and Japan Conduct First Joint Yen Intervention Since 1998

The governments of 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 operation, the first joint effort to support the yen since 1998 and the first general currency intervention between the two nations since 2011, drove the yen to a three-month high of approximately 155.20 per dollar before it steadied around 158 by August 7.

Donald Trump characterized the move as a "signal of friendship" and a benefit to the global economy. To execute the intervention without directly weakening the U.S. dollar, the U.S. Treasury Department sold euro reserves to purchase yen through the Federal Reserve Bank of New York. Japan's contribution was significantly larger, with estimates suggesting Tokyo spent between $52 billion and $89 billion over two days. To prevent Japan from selling its $1.1 trillion in U.S. Treasury holdings to fund these purchases—which would spike U.S. borrowing costs—the U.S. provided access to the Federal Reserve's FIMA Repo Facility, allowing Japan to use Treasuries as collateral for dollar loans.

U.S. Treasury Secretary Scott Bessent described the yen as "very undervalued" and pledged to do "whatever it takes" to support Japan. While the intervention provided immediate relief, the Bank of Japan maintained its short-term interest rate at 1% on July 31, though it signaled potential hikes in September to combat inflation. The surge in the yen's value triggered a sharp decline in the Nikkei 225, particularly among export-oriented automotive and electronics firms.