U.S. and Japanese authorities step up efforts to curb yen weakness

2026-08-01

Yen surges sharply

In the New York foreign exchange market on July 31, the yen surged against the dollar, briefly touching around 157.20 per dollar, its strongest level against the dollar and weakest for the greenback since mid-May. The yen was bought rapidly, with the rate moving up several times.

The government and the Bank of Japan carried out intermittent yen-buying intervention again on the 31st, after doing so on the 30th as well. The yen, which had been in the upper 162-yen range before the intervention, was pushed back by about 5 yen.

Greater U.S. involvement

What drew strong attention in the market on the 31st was the repeated emergence of signs that Japanese and U.S. currency authorities were moving in step to curb yen weakness.

The U.S. Treasury told several banks that yen-buying intervention could be carried out on the same day and urged them to prepare. The move followed rate checks on the 30th, a step taken ahead of intervention, and suggested a strong U.S. stance against excessive dollar strength.

Reuters distributed a photo showing a handwritten note on U.S. Treasury Secretary Bessent's desk during a cabinet meeting, with a to-do list that included buying $5 billion to $10 billion worth of yen. Britain's Financial Times also reported that U.S. authorities intervened by selling euros and buying yen.

Finance Vice Minister Atsushi Mimura told reporters on the 31st that the United States was providing support that went beyond mere moral backing, suggesting further U.S. involvement.

Intervention scale and market views

If several currency authorities consult and time their foreign exchange intervention to match one another, it could be taken as coordinated intervention. Japan and the United States have done so during the 1998 financial crisis and after the 2011 Great East Japan Earthquake, and such action is seen as having a larger market impact than unilateral intervention.

According to a government source, the government plans to clarify its policy on the yen's weakness and related intervention measures as early as next week.

In the early hours of Aug. 1 Japan time, the Finance Ministry posted on X, formerly Twitter, that it had a means to raise dollar funds from U.S. authorities using U.S. Treasuries held by the Japanese government as collateral. The post was seen as a warning to market speculation that the resources available for yen-buying, dollar-selling intervention were limited, with the aim of extending the intervention's effectiveness.

The market estimates the government's and BOJ's intervention on the 30th at 6 trillion to 7 trillion yen. Intervention from late April to late May totaled 11.7 trillion yen, bringing the combined amount to roughly 18 trillion yen. That already exceeds the annual record of 15.3 trillion yen set in 2024 for yen-buying intervention.

Shogo Kariya, strategist at Minato Bank, said the chance of a long-running one-way yen weakness trend reversing has gradually increased. Rikiya Takebe, senior strategist at Okasan Securities, said the U.S. and Japan appear to have strengthened coordination over the foreign exchange market since Bessent's visit to Japan in May.

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