Source The Hindu
TOKYO — Japan’s Ministry of Finance confirmed on Monday that it conducted a rare joint yen-buying intervention in coordination with the U.S. Treasury Department, signaling that both nations stand ready to take further market measures if volatility persists.
The announcement marks the first coordinated foreign exchange intervention between Washington and Tokyo since March 2011, when global central banks stepped in to weaken the yen following the Tohoku earthquake and tsunami.
The joint action was carried out under the framework of the U.S.-Japan Finance Ministers’ Joint Statement signed in September 2025. Official confirmation came after the yen dropped to a 40-year low of nearly ¥164 against the U.S. dollar, driven by persistent interest rate differentials, rising global energy costs, and widespread speculative short positioning.
Joint Resolve and Immediate Market Impact
“The Japanese Ministry of Finance remains attentive and in close communication with our counterparts at the U.S. Treasury,” the ministry stated. “We will not hesitate to conduct further joint intervention.”
Tokyo’s top currency diplomat, Atsushi Mimura, described the joint intervention as the “culmination of Japan’s alliance with the United States,” adding that government currency policies would continue to align with the Bank of Japan’s monetary stance.
Following the announcement, the greenback fell sharply against the Japanese currency. The dollar dropped by up to 1% in Asian trading, touching an intraday low of 155.20 JPY—its strongest level in nearly three months—before paring back gains to trade around 156.50.
U.S. President Donald Trump publicly acknowledged Washington’s involvement, framing the move as a cooperative effort to support a key ally and foster global economic stability.
“They have a weakening yen, and they wanted a little bit of help,” Trump said. “And we’re always there for Japan.”
In a parallel statement, U.S. Treasury Secretary Scott Bessent strongly backed Tokyo’s steps to address what he termed a “substantial undervaluation” of the currency. Bessent also urged the Bank of Japan to continue raising interest rates to address structural imbalances.
Funding Mechanisms and Structural Challenges
Bank of Japan data suggests Tokyo may have spent as much as $58.97 billion in New York markets to buy yen. To support liquidity without forcing outright sales of U.S. Treasuries, Japan plans to utilize the Federal Reserve’s Foreign and International Monetary Authorities (FIMA) Repo Facility. U.S. Treasury officials indicated potential plans to expand the facility’s capacity in the coming months as an additional backstop.
Despite the dramatic signal sent to currency markets, financial analysts remain divided over whether joint intervention alone can halt the yen’s long-term slide. While coordinated interventions carry significantly more weight than solo actions by Tokyo, fundamental pressures—including elevated Middle East oil prices and persistent yield gaps between Japan and the West—continue to weigh on the yen.
