- The joint U.S.-Japanese effort to counter speculative yen-selling followed months of preparation and a rare public alignment of interests between Washington and Tokyo, aided by Treasury Secretary Scott Bessent's verbal support for a stronger yen.
- U.S. participation in yen-buying intervention was under consideration as early as January, when the New York Federal Reserve made rare rate checks to help Tokyo, according to a Japanese government official.
- Finance Minister Satsuki Katayama said she and Bessent held about 10 talks; Bessent's May visit followed a large Japanese yen-buying intervention that failed to reverse the yen's downtrend.
- Mimura gave the green light to buy yen late on July 30 amid the Bank of Japan's (BOJ) two-day policy meeting, and the move firmed the yen to 157.80 per dollar from around 162.80.
- Washington joined Tokyo in the yen defense, and Bessent's notepad included "Buy Japanese Yen (JPY) $5-10 bil".
- BOJ Governor Kazuo Ueda's remarks were read as all but confirming a September rate hike, and Bessent said he would meet Ueda at a U.S.-hosted G20 meeting in end-August before the BOJ's September 17 and 18 policy meeting.
- For Japan, a weak yen fanned import prices and hurt Prime Minister Sanae Takaichi's government; for the U.S., it blunted President Donald Trump's tariffs and risked spillover into U.S. Treasury yields.
- With the yen at a four-decade low, top currency diplomat Atsushi Mimura shifted from daily verbal warnings to behind-the-scenes coordination with U.S. counterparts.
The U.S. and Japan have united to address the challenges posed by yen speculators, marking a significant shift in their economic strategies.
The joint effort, confirmed last week, comes after months of discussions and a rare alignment of interests between Washington and Tokyo. U.S. Treasury Secretary Scott Bessent revealed plans to purchase ¥5-10 billion in yen, a move aimed at stabilizing the currency, which has recently hit a four-decade low.121415
A weak yen has exacerbated import prices, creating economic challenges for Japan, including for Prime Minister Sanae Takaichi. For the U.S., the depreciation of the yen undermines the trade advantages from President Donald Trump's tariffs and could affect U.S. Treasury yields due to a sell-off in Japanese government bonds.1213
The collaboration was considered as early as January, with the New York Federal Reserve conducting rare rate checks to assist Tokyo. Japanese Finance Minister Satsuki Katayama noted that discussions with Bessent occurred approximately 10 times leading up to this agreement.345
The yen's decline prompted Japan's top currency diplomat, Atsushi Mimura, to adopt new tactics, focusing on behind-the-scenes cooperation with U.S. officials. The recent intervention, which occurred during a Bank of Japan policy meeting, successfully firmed the yen from 162.80 to 157.80 per dollar.67
This joint pact signifies a crucial step in addressing the economic pressures faced by both nations as they navigate the complexities of global currency markets.
“Japan bought yen late on July 30 during the BOJ's meeting, firming it to 157.80 from 162.80 per dollar. For Japan, the weak yen had fanned import prices under PM Sanae Takaichi; for the U.S., it blunted Donald Trump's tariffs and risked spillover into Treasury yields.”
