The first joint currency intervention since the 2011 earthquake just sent the yen jumping over 1% in a single move.
Japan’s Ministry of Finance confirmed on Monday that Tokyo and Washington jointly bought yen on Friday, marking the first coordinated intervention between the two countries in over a decade. Officials say they’re ready to do it again, and the timing is no accident – the yen had just slid to a 40-year low.
What Actually Happened
Japan’s finance ministry said the Friday move was meant to curb wild swings and disorderly price action in the yen. Finance Minister Satsuki Katayama told reporters the two countries won’t hesitate to step in together again if needed.
Before the confirmed joint action, BOJ data suggests Japan may have already spent close to $59 billion buying yen during a solo intervention in New York markets on Thursday. That followed an earlier, less successful attempt between late April and early May, which only produced a brief bounce. Even June’s rate hike to 1% – a 31-year high for Japan – barely moved the needle.
This time was different. The yen jumped past 1% to trade around 155.20 per dollar, its best level since early May and a sharp turnaround from the roughly 164 mark it touched last month.
President Trump framed Washington’s involvement as a gesture of friendship toward Japan and a move meant to support the broader world economy. Behind the scenes, though, analysts say the US has its own reasons: a collapsing yen has been quietly undercutting the benefits of Trump’s tariff policy.
Market Reaction
Bond markets reacted fast. The two-year Japanese government bond yield briefly touched 1.545% on Monday – its highest since 1995 – as traders bet the Bank of Japan will raise rates again as soon as September.
US Treasury Secretary Scott Bessent backed the move publicly, saying Washington stands ready to join further coordinated action and voicing support for Japan’s efforts to fix what he called a significantly undervalued yen. He also said the US may expand the Fed’s repo facility in the coming months, a tool that lets Japan access dollar liquidity without dumping US Treasuries outright.
Why It Matters for Traders
A joint intervention carries far more psychological weight than Japan acting alone, and it puts real pressure on the BOJ to follow through with a rate hike. But several economists caution that the deeper forces pushing the yen down – high Middle East-driven fuel costs and a wide gap between Japanese and US interest rates – haven’t actually changed.
All eyes now turn to the BOJ’s September meeting. If the central bank hikes rates as markets expect, it could give the yen a more lasting lift. If it hesitates, the currency’s slide could resume just as fast as it reversed.
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Source: Reuters
Time: 4:35 PM EEST
