The United States and Japan have executed a rare joint intervention in currency markets to address the recent depreciation of the Japanese yen. This marks the first time the two nations have coordinated such an effort since 2011, when they acted to weaken the yen following a major earthquake and tsunami.

The move follows a period where the yen reached a 40-year low, driven largely by a significant interest rate disparity between Japan and other major economies. While the Bank of Japan raised its main interest rate to 1% in June—its highest level since 1995—it remains well below the US Federal Reserve’s benchmark range of 3.50% to 3.75%. Japan also contends with structural economic challenges, including a shrinking working-age population and a dependency on energy imports priced in US dollars.

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Data from the Bank of Japan suggests Tokyo may have sold nearly $59 billion in US dollars to purchase yen during market operations last Thursday. While the exact scale of the US contribution remains unconfirmed, a photograph from a cabinet meeting showed a note referencing a potential $5-10 billion purchase of yen.

Officials from both sides have signaled a willingness to continue these efforts. US Treasury Secretary Scott Bessent stated that the coordinated actions were intended to counter "disorderly" market movements, while President Donald Trump noted that the US provided assistance to support its ally. Shigeto Nagai of Oxford Economics suggested that even intermittent, smaller-scale interventions could prove effective by maintaining market vigilance and deterring speculators.

Source: BBC News