Japan and the United States have confirmed that they acted together last week to stop the fall of the yen, which hit a new 40-year low.
This joint intervention is the first since 2011, when both countries - within the framework of the G7 - took coordinated measures to weaken the yen and help economic recovery after the devastating earthquake and tsunami that hit eastern Japan.
Both Japan's Ministry of Finance and US Treasury Secretary Scott Bessent have stated that they will not hesitate to carry out more joint interventions in the future.
The move highlights efforts by both countries to prevent a selloff in yen and Japanese government bonds from having an impact on the global economy, including possibly contributing to higher borrowing costs for Washington.
Bank of Japan data indicated Tokyo may have sold about $59 billion to buy yen when it intervened in New York markets on Thursday, ahead of the joint operation confirmed with Washington on Friday.
The United States has not confirmed the extent of its intervention, but a photograph from the Reuters news agency showing a notepad in front of Bessent during a cabinet meeting on Friday says: "To-do: Buy between $5 billion and $10 billion worth of Japanese yen."
Shigeto Nagai, head of the Japanese Economics Department at Oxford Economics, told the BBC that "the United States agreed to participate in the coordinated intervention because it serves its national interests by offering the prospect of significant benefits at low cost."
Both countries are expected to continue intervening “in an intermittent and coordinated manner for some time,” he added.
“Even if the actual amount of intervention is not particularly large, the prolonged sense of vigilance regarding the intervention will be effective in deterring speculators.”
A historic ally “with one exception”
Historically, the yen has weakened primarily because Japan maintains much lower central bank interest rates than other major economies such as the United States. This makes the Japanese currency less attractive to international investors.
The Bank of Japan last raised interest rates in June, raising its main rate to 1%, the highest level since September 1995. By comparison, the US Federal Reserve's benchmark rate is between 3.50% and 3.75%.
Japan also faces other problems, including a decades-long decline in its working-age population, low productivity and a heavy dependence on energy imports, which are priced in US dollars.
On Monday, Japan's Finance Ministry stated that Friday's intervention with the US Treasury Department "countered the excessive volatility and disorderly movements of the Japanese yen in recent months."
“Coordinated currency actions countered disorderly movements in the yen,” Bessent said in a social media post.
“We strongly support the decisive monetary and market measures that Japan is taking to correct the significant undervaluation of the yen,” he added.
“Japan has been very good to us, with the exception, of course, of Pearl Harbor,” said the US president, while emphasizing that this intervention will be “good for the world economy.”
Following Trump's comments, the dollar fell 0.2% to 157.07 yen, well below last month's 40-year high of 164, but recovered to 157.70 yen following the Japanese Finance Ministry's statement.
*Additional reporting by Osmond Chia
This article was originally written in English and we used an artificial intelligence tool to translate it. A BBC journalist reviewed the text before publication. Learn more about how we use AI.
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