US and Japan Confirm Joint Currency Intervention to Halt Yen's Slide to 40-Year Low

The Japanese and US governments have confirmed that they jointly intervened in the foreign exchange market last week to prevent the yen from plunging to a 40-year low. This is the first time since 2011 that the two countries have coordinated a currency intervention, which previously occurred after the devastating earthquake and tsunami in eastern Japan. Both Japan's Ministry of Finance and US Treasury Secretary Scott Bessent stated they would not hesitate to take further joint action if necessary. The move underscores efforts by both nations to prevent a sell-off of the yen and Japanese government bonds that could destabilize the global economy, including potentially raising US borrowing costs. Shigehito Nagai, Japan economist at Oxford Economics, told the BBC: "The US agreed to participate because it serves its national interest, offering significant benefits at relatively low cost." He added that intermittent coordinated interventions are likely to continue for the foreseeable future. "Even if the actual scale of intervention isn't particularly large, the market's prolonged awareness of intervention risks can serve as a deterrent to speculators." The yen's prolonged weakness stems largely from the Bank of Japan's interest rates being far below those of major economies like the US, making yen-denominated assets less attractive to international investors. The Bank of Japan last raised rates in June, lifting its policy rate to 1%, the highest since September 1995. In contrast, the US Federal Reserve's benchmark interest rate currently stands between 3.50% and 3.75%. Japan also faces structural challenges, including decades of declining working-age population, low productivity, and heavy reliance on dollar-denominated energy imports. Japan's Ministry of Finance said on Monday (August 3) that the joint intervention with the US Treasury on Friday "aimed to address excessive volatility and disorderly movements in the yen market in recent months." Bessent also posted on social media that the "coordinated foreign exchange action has halted disorderly yen movements." He added: "We strongly support Japan's decisive market and monetary policy measures to correct the yen's significant undervaluation." President Trump told reporters on Sunday: "Their yen is weakening, and they wanted a little help, and we've always supported Japan." Following Trump's remarks, the dollar-yen pair briefly fell 0.2% to 157.07, a significant retreat from the 40-year high of 164 reached last month. However, after the Ministry of Finance's statement, the pair rebounded to 157.70. Data from the Bank of Japan suggests Japanese authorities may have sold nearly $59 billion in New York on Thursday, buying yen ahead of the confirmed joint intervention with Washington on Friday. The US has not disclosed the scale of its intervention, but a photo taken by Reuters showed Bessent's notebook during a cabinet meeting on Friday with a to-do item reading: "Buy $5-10 billion yen." Osmond Chia also contributed to this report. This article was assisted by artificial intelligence for translation from its original English version. The content was reviewed by BBC journalists before publication.