Japan and US confirm rare joint intervention to prop up yen

The Japanese Ministry of Finance confirmed the joint intervention after a statement by US President Donald Trump on Sunday announced that Washington was helping to prop up the yen as a sign of friendship and to support the global economy.

“They have a weakening yen, and they wanted a little bit of help. And we’re always there for Japan,” Trump said in response to a reporter’s query about why the US is helping to support the currency.

The yen leapt after the announcement, leaving traders on high alert for further intervention from authorities. The Japanese currency gained as much as 1.4 percent to hit a nearly three-month high of 155.20 per US dollar, compounding a 3.8 percent surge over the previous two sessions. The yen also advanced broadly against other major currencies, including the euro and sterling.

The latest bout of aggressive yen-buying heavily pressured the US dollar. In early Asian trading on Monday, the euro climbed to a 1.5-month high of $1.1559, while sterling hovered near a two-week top at $1.3476.

However, the rapid appreciation of the currency immediately weighed on the equity market. The Nikkei share average tumbled, reversing course from the one-week high it had achieved in the previous session.

Analysts say the intervention underscores both countries’ resolve to prevent global spillovers from a sell-off in the yen and Japanese government bonds, including by adding pressure on already rising US Treasury yields.

Japan has been struggling to curb a relentless drop in its currency that has pushed up import prices and stoked broader inflation, hitting household wallets and Prime Minister Sanae Takaichi’s approval ratings.

In its statement, Japan’s Finance Ministry said Friday’s yen-buying intervention with the US Treasury Department “countered excessive volatility and disorderly movements in the Japanese yen in recent months”.

“The Japanese Ministry of Finance remains attentive and in close communication with our counterparts at the U.S. Treasury,” it added. “We will not hesitate to conduct further joint intervention.”

The joint intervention is the first since a 2011 coordinated action to weaken the yen after the devastating earthquake in eastern Japan.

Tokyo may have sold as much as $58.97bn to buy yen when it intervened in New York markets on Thursday, Bank of Japan data indicated, before Friday’s confirmed joint intervention with Washington.

US Treasury Secretary Scott Bessent also confirmed Friday’s effort, noting on Sunday that Washington “will not hesitate to participate in further joint intervention”.

“We strongly support Japan’s decisive market and monetary steps to correct the substantial undervaluation of the yen,” Bessent said in a separate statement on X, repeating his calls for further interest rate hikes by the Bank of Japan.

In line with Bessent’s repeated calls for higher Japanese interest rates, the Bank of Japan on Friday offered its most explicit signal to date of an early rate hike, even as it kept monetary policy steady.

In a sign of broader policy coordination, South Korea also stepped in to buy its won currency on Thursday.

Japan intervened in April and May, buying yen, but the move triggered only a brief rebound. The Bank of Japan’s June rate hike to a 31-year high of 1 percent also gave the struggling currency little lasting boost.