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

The United States and Japan confirmed on August 3, 2026, that they jointly intervened in foreign-exchange markets on July 31 to support the yen, which had plunged to a 40-year low against the dollar. Such coordinated buying last took place in 2011, when both countries sold yen after the devastating earthquake and tsunami in eastern Japan. This time, the move seeks to avert a destabilizing sell-off in the yen and Japanese government bonds that could ripple through the global economy and drive up US borrowing costs. The yen’s chronic weakness was driven by a wide gap between Japanese and US interest rates. The Bank of Japan in June raised its main rate to 1%, the highest since 1995, while the Federal Reserve’s benchmark sits in a range of 3.50% to 3.75%. A shrinking working-age population, low productivity and heavy dependence on dollar-priced energy imports added to the pressure on the currency. Japan’s finance ministry said the July 31 intervention with the US Treasury “countered excessive volatility and disorderly movements in the Japanese yen in recent months.” US Treasury Secretary Scott Bessent echoed that stance, adding: “We strongly support Japan’s decisive market and monetary steps to correct the substantial undervaluation of the yen.” President Donald Trump told reporters on August 2 that “they have a weakening yen, and they wanted a little bit of help. And we’re always there for Japan.” After Trump’s remarks, the dollar briefly fell 0.2% to 157.07 yen, well off the 40-year high of 164 hit in July. It later rebounded to 157.70 yen following the finance ministry’s statement on August 3. Bank of Japan data indicated Tokyo may have sold almost $59 billion of US dollars to buy yen when it intervened in New York markets on July 30, before the confirmed joint action the next day. The US did not disclose the size of its intervention, but a Reuters photograph of a notepad in front of Bessent during a cabinet meeting on July 31 read: “To Do: Buy Japanese Yen $5-10 bil.” Both the Japanese finance ministry and Bessent said they would not hesitate to conduct joint interventions again, signaling readiness to act if the yen faces renewed pressure.