The Japanese yen saw significant gains in trading on Monday as investors responded to confirmation from both Tokyo and Washington that they had jointly intervened in the foreign exchange market to address recent instability in Japan’s currency. Market participants remained alert for further possible action by authorities, given the yen’s continued vulnerability after hitting its lowest levels in decades.
Japan’s Ministry of Finance revealed that it had worked in concert with the U.S. Treasury on Friday to buy yen, seeking to counteract the sharp depreciation of the currency witnessed last week. The ministry underscored its readiness to coordinate additional interventions as needed, maintaining ongoing communication with U.S. officials.
Last Thursday, the yen had dropped to 163.73 per dollar—its weakest in about 40 years—before strengthening to 157.57 after the announcement of the joint operation and hovering around 156.54 on Monday. Japan’s approach followed guidelines set out in a September 2025 joint statement with the U.S., focused on mitigating excessive volatility in the foreign exchange markets.
Additionally, Japan’s finance ministry indicated plans to make use of the Federal Reserve’s foreign and international monetary authorities (FIMA) repo facility, which enables foreign central banks to access short-term U.S. dollar liquidity by temporarily exchanging Treasury securities.
Confirmation of the collaborative intervention was echoed by U.S. Treasury Secretary Scott Bessent, who stated that the measures taken on Friday were intended to stabilize the yen’s disorderly movements. Bessent also expressed support for Japan’s broader currency policies, noting that the U.S. would not hesitate to join future interventions if needed.
President Donald Trump commented that U.S. participation in the intervention was intended as an act of support for Japan and global economic stability, describing the action as a gesture of goodwill between the two nations.
Despite the effort, some market observers questioned the strategy behind Washington’s participation. Robin Brooks of the Peterson Institute for International Economics suggested that if the U.S. financed yen purchases by selling euros rather than dollars, it might lead investors to speculate about the reasons behind not using U.S. dollar reserves, potentially undermining confidence in the operation.
Meanwhile, recent data suggested that Tokyo may have deployed as much as $58.97 billion in yen-buying interventions last week. Analysts at major financial institutions noted the historical effectiveness of coordinated currency interventions, pointing out previous successes since the late 1990s.
The yen remains under downward pressure due to persistent interest rate differentials between Japan and other major economies, a consequence of the Bank of Japan’s gradual approach to policy tightening. Goldman Sachs indicated that, outside of shifts in monetary policy or global economic growth, steps to encourage the repatriation of overseas assets could most effectively support the currency over the longer term.
