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U.S. and Japan Intervene Jointly to Support Yen, Seeking to Limit Treasury-Sale Risks

2026-08-03·newswire-us-stock-091001
U.S. and Japan Intervene Jointly to Support Yen, Seeking to Limit Treasury-Sale Risks.

The United States and Japan have recently taken joint action in the foreign-exchange market to buy yen after the yen-dollar exchange rate fell to its weakest level in nearly 40 years. It was the first time since 1998 that the two countries had jointly intervened to buy yen, according to the report. Analysts said the rare U.S.

participation reflected concern about turmoil in the U.S. Treasury market, while also advancing Washington’s geopolitical, economic and trade objectives. The yen-dollar rate had fallen as low as 163.73 before rebounding to 157.57 after the intervention.

Japan’s Finance Ministry said it planned to use the Federal Reserve’s FIMA, or Foreign and International Monetary Authorities, repo facility in future foreign-exchange interventions. Analysts at Oxford Economics, State Street and other institutions emphasized that both countries face pressure from rising long-term borrowing costs.

Japan is the largest overseas holder of U.S. Treasuries, and U.S. officials are highly concerned that Japan could sell Treasuries on a large scale to raise funds for intervention. The FIMA repo facility allows Japan to obtain dollar liquidity without directly selling its Treasury holdings. The primary U.S.

objective in participating in the intervention was to prevent spillover effects from forced Treasury sales from reaching U.S. financing markets and threatening dollar stability, the analysts said. The joint intervention also revealed broader U.S. strategic considerations.

President Donald Trump said the participation was intended to support Japan and maintain global economic stability. Experts said that, against the backdrop of Trump’s administration and Japanese Prime Minister Sanae Takaichi’s government, the move was intended to demonstrate the strength of the U.S.-Japan alliance and send a geopolitical signal to China.

Washington has also long viewed the yen as significantly undervalued, arguing that this gives Japan an unfair export advantage. The United States is seeking to weaken that trade benefit through the intervention, according to the report.

Although the two countries have sought through the joint action and official statements to strengthen their deterrent effect on speculators, international markets have widely questioned the operation’s specific mechanics and effectiveness. The report said the United States took the unusual step of selling euros to buy yen during the intervention.

Robin Brooks, a senior fellow at the Brookings Institution, said the unconventional operation would disrupt markets and ultimately backfire. Several market participants reiterated that the yen’s weakness stems from artificial suppression in Japan’s bond market and structural interest-rate differentials.

The joint intervention may only buy time for the Bank of Japan to tighten monetary policy. Without fundamental changes to its macroeconomic policies, Japan’s foreign-exchange intervention alone is ultimately unlikely to reverse the yen’s long-term depreciation trend, they said.

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Full text

U.S. and Japan Intervene Jointly to Support Yen, Seeking to Limit Treasury-Sale Risks

The United States and Japan have recently taken joint action in the foreign-exchange market to buy yen after the yen-dollar exchange rate fell to its weakest level in nearly 40 years. It was the first time since 1998 that the two countries had jointly intervened to buy yen, according to the report. Analysts said the rare U.S. participation reflected concern about turmoil in the U.S. Treasury market, while also advancing Washington’s geopolitical, economic and trade objectives. The yen-dollar rate had fallen as low as 163.73 before rebounding to 157.57 after the intervention. Japan’s Finance Ministry said it planned to use the Federal Reserve’s FIMA, or Foreign and International Monetary Authorities, repo facility in future foreign-exchange interventions. Analysts at Oxford Economics, State Street and other institutions emphasized that both countries face pressure from rising long-term borrowing costs. Japan is the largest overseas holder of U.S. Treasuries, and U.S. officials are highly concerned that Japan could sell Treasuries on a large scale to raise funds for intervention. The FIMA repo facility allows Japan to obtain dollar liquidity without directly selling its Treasury holdings. The primary U.S. objective in participating in the intervention was to prevent spillover effects from forced Treasury sales from reaching U.S. financing markets and threatening dollar stability, the analysts said. The joint intervention also revealed broader U.S. strategic considerations. President Donald Trump said the participation was intended to support Japan and maintain global economic stability. Experts said that, against the backdrop of Trump’s administration and Japanese Prime Minister Sanae Takaichi’s government, the move was intended to demonstrate the strength of the U.S.-Japan alliance and send a geopolitical signal to China. Washington has also long viewed the yen as significantly undervalued, arguing that this gives Japan an unfair export advantage. The United States is seeking to weaken that trade benefit through the intervention, according to the report. Although the two countries have sought through the joint action and official statements to strengthen their deterrent effect on speculators, international markets have widely questioned the operation’s specific mechanics and effectiveness. The report said the United States took the unusual step of selling euros to buy yen during the intervention. Robin Brooks, a senior fellow at the Brookings Institution, said the unconventional operation would disrupt markets and ultimately backfire. Several market participants reiterated that the yen’s weakness stems from artificial suppression in Japan’s bond market and structural interest-rate differentials. The joint intervention may only buy time for the Bank of Japan to tighten monetary policy. Without fundamental changes to its macroeconomic policies, Japan’s foreign-exchange intervention alone is ultimately unlikely to reverse the yen’s long-term depreciation trend, they said.

The United States and Japan have recently taken joint action in the foreign-exchange market to buy yen after the yen-dollar exchange rate fell to its weakest level in nearly 40 years. It was the first time since 1998 that the two countries had jointly intervened to buy yen, according to the report. Analysts said the rare U.S. participation reflected concern about turmoil in the U.S. Treasury market, while also advancing Washington’s geopolitical, economic and trade objectives.

The yen-dollar rate had fallen as low as 163.73 before rebounding to 157.57 after the intervention. Japan’s Finance Ministry said it planned to use the Federal Reserve’s FIMA, or Foreign and International Monetary Authorities, repo facility in future foreign-exchange interventions. Analysts at Oxford Economics, State Street and other institutions emphasized that both countries face pressure from rising long-term borrowing costs. Japan is the largest overseas holder of U.S. Treasuries, and U.S. officials are highly concerned that Japan could sell Treasuries on a large scale to raise funds for intervention.

The FIMA repo facility allows Japan to obtain dollar liquidity without directly selling its Treasury holdings. The primary U.S. objective in participating in the intervention was to prevent spillover effects from forced Treasury sales from reaching U.S. financing markets and threatening dollar stability, the analysts said.

The joint intervention also revealed broader U.S. strategic considerations. President Donald Trump said the participation was intended to support Japan and maintain global economic stability. Experts said that, against the backdrop of Trump’s administration and Japanese Prime Minister Sanae Takaichi’s government, the move was intended to demonstrate the strength of the U.S.-Japan alliance and send a geopolitical signal to China. Washington has also long viewed the yen as significantly undervalued, arguing that this gives Japan an unfair export advantage. The United States is seeking to weaken that trade benefit through the intervention, according to the report.

Although the two countries have sought through the joint action and official statements to strengthen their deterrent effect on speculators, international markets have widely questioned the operation’s specific mechanics and effectiveness. The report said the United States took the unusual step of selling euros to buy yen during the intervention. Robin Brooks, a senior fellow at the Brookings Institution, said the unconventional operation would disrupt markets and ultimately backfire.

Several market participants reiterated that the yen’s weakness stems from artificial suppression in Japan’s bond market and structural interest-rate differentials. The joint intervention may only buy time for the Bank of Japan to tighten monetary policy. Without fundamental changes to its macroeconomic policies, Japan’s foreign-exchange intervention alone is ultimately unlikely to reverse the yen’s long-term depreciation trend, they said.

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