US and Japan jointly intervene to prop up yen in rare move

Japan and the US have confirmed that they jointly intervened last week to halt a slide in the yen to a fresh 40-year low.

The joint intervention is the first since 2011, when both countries took coordinated action to weaken the yen after the devastating earthquake and tsunami that hit eastern Japan.

Both Japan’s finance ministry and US Treasury Secretary Scott Bessent have said that they will not hesitate to conduct joint interventions in the future.

It highlights both countries’ efforts to prevent a sell-off in the yen and Japanese government bonds from having an impact on the global economy, including helping to push up borrowing costs for Washington.

The yen is historically weak mainly due to Japan having much lower central bank interest rates than other major economies like the US. That makes the Japanese currency less attractive to international investors.

The Bank of Japan last raised interest rates in June, as it increased its main rate to 1% – the highest level since September 1995. In comparison, the US Federal Reserve’s benchmark rate is in a range of 3.50% to 3.75%.

Japan also faces a decades-long slide in its working-age population, low productivity and a heavy reliance on energy imports that are priced in US dollars.

On Monday, Japan’s finance ministry said Friday’s intervention with the US Treasury Department “countered excessive volatility and disorderly movements in the Japanese yen in recent months”.

The “coordinated foreign exchange actions countered disorderly yen movements,” Bessent said in a social media post.

“We strongly support Japan’s decisive market and monetary steps to correct the substantial undervaluation of the yen,” he added.

“They have a weakening yen, and they wanted a little bit of help. And we’re always there for Japan,” US President Donald Trump told reporters on Sunday.