Japan’s Finance Minister Satsuki Katayama is set to announce on Monday that Tokyo and Washington carried out joint action in the currency market, confirming a Japan US yen intervention aimed at halting the yen’s slide to 40-year lows, according to two Japanese government officials cited by Reuters. The announcement follows what market sources described as rounds of yen-buying by Japanese and U.S. authorities, marking the first joint intervention between the two countries since 2011.
According to Reuters, Katayama is expected to stress the determination of both governments to counter what they view as excessive declines in the Japanese yen. One source told Reuters that when asked whether Katayama would confirm “joint action,” the answer was yes, adding that the operation remained ongoing. Japan’s Ministry of Finance could not immediately be reached for comment on Sunday, and U.S. Treasury Department officials did not immediately respond to requests for comment, Reuters reported.
The reported Japan US joint currency intervention sought to lift the yen from its weakest levels against the dollar since 1986. Reuters cited a market source as saying the Japanese government bought yen for dollars during New York trading hours on Thursday, with Bank of Japan data suggesting it sold as much as $58.97 billion to support the currency.
Tokyo’s initial intervention came hours before the Bank of Japan decided on Friday to hold monetary policy steady while signalling a strong likelihood of raising interest rates soon, according to Reuters. A widening interest rate gap with the United States, where the Federal Reserve has adopted a more hawkish stance, has been identified as a key factor behind the dollar’s rise against the yen.
Shortly after BOJ Governor Kazuo Ueda held a press conference on the central bank’s decision, the yen spiked in a move markets suspected may have reflected further yen-buying intervention by Tokyo, Reuters reported. Japan’s top currency diplomat, Atsushi Mimura, told reporters afterward that the Ministry of Finance intended to coordinate its currency response closely with monetary policy, suggesting close cooperation between the ministry and the central bank.
Separately on Friday, the US Treasury informed several banks that it might intervene in the yen market and should remain prepared for possible action, a source familiar with the matter told Reuters. Treasury Secretary Scott Bessent, who had said the previous week that the yen “seems very undervalued to me,” was seen with a notepad at a Friday cabinet meeting listing a plan to buy $5 billion to $10 billion worth of Japanese yen, according to a Reuters photograph.
In a further sign of coordination, Japan’s Ministry of Finance posted a rare English-language statement on X saying it had a broad range of tools available to address market liquidity needs, including access to the Federal Reserve’s repurchase facility for temporary dollar liquidity, Reuters reported. That facility, introduced in 2020 to stabilise markets during the COVID-19 pandemic, allows Japan to raise dollar liquidity without directly selling U.S. Treasury holdings, potentially easing funding pressure linked to intervention.
Some analysts noted that continued yen-buying could pose challenges for Japan, since reducing its large Treasury holdings to fund intervention risks triggering a selloff in U.S. debt and pushing yields higher, according to Reuters. Former Bank of Japan official Nobuyasu Atago told Reuters that both the U.S. and Japan face risks of rising inflation outpacing their central banks’ responses, adding that this shared concern gives both sides an incentive to cooperate.
Japan’s Economy Minister Minoru Kiuchi said on Sunday that the government would strengthen its communication with markets, telling a television programme that maintaining market confidence in “Japan’s fiscal sustainability” remained essential, Reuters reported. Currency and interest rate pressures have similarly drawn attention elsewhere in recent weeks, with South Africa’s central bank also weighing its own interest rate decisions amid comparable economic pressures.
Tokyo and Washington have yet to officially disclose the full scope of the Japan US yen intervention, with further details expected after Katayama’s announcement on Monday.
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