US, Japan intervene jointly to lift yen from 40-year low

The United States and Japan carried out a rare coordinated intervention in currency markets last week to halt the yen's slide to a 40-year low against the dollar. Officials from both nations confirmed the action on Monday, marking the first such joint move since 2011.

Japan's Ministry of Finance reported that the two governments bought yen in New York markets on Thursday and Friday. Bank of Japan figures show Tokyo sold nearly 59 billion dollars in the process. US Treasury Secretary Scott Bessent did not disclose the American share but a photograph of his notes from a cabinet meeting listed plans to purchase between 5 and 10 billion dollars worth of yen. The yen climbed to around 155 to the dollar on Monday, its strongest level in three months.

President Trump addressed the move on Sunday, stating that Japan sought help with its weakening currency and that the United States was there to provide it. Bessent added that Washington would not hesitate to join further interventions if needed. Japanese authorities echoed the same message, signaling readiness for additional steps.

The yen's weakness stems largely from Japan's lower interest rates compared with the United States and other major economies. This gap has encouraged carry trades where investors borrow in yen to chase higher yields elsewhere. Recent concerns over Japanese fiscal plans under Prime Minister Sanae Takaichi have added pressure, as have broader questions about the pace of Bank of Japan rate adjustments.

Market analysts note the intervention produced a short-term lift but question how long it will last without deeper changes in Japanese policy. Some point out that real interest rates in Japan remain negative, leaving the currency more dependent on the threat of further official action than on underlying fundamentals. Others highlight that the dollar has shown resilience despite the moves, partly because investors continue to weigh potential Federal Reserve decisions on rates.

The episode underscores ongoing efforts to shield global markets from fallout in Japanese bonds and currency. Washington has its own stake, as sharp yen weakness can influence US borrowing costs through shifts in international capital flows. Still, the use of American resources to support a foreign currency raises questions about priorities at a time when domestic economic pressures remain acute.

Both sides indicated the interventions could continue intermittently. Observers expect the coordinated approach to create a period of caution among traders, even if the total amounts involved stay modest. The yen's path from here will depend on whether Tokyo follows through with meaningful rate increases or sticks to stimulus measures that keep borrowing costs low.