Tokyo and Washington confirm unusual joint intervention | Japan Daily Briefing

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The Japanese and US governments confirmed that they carried out a joint foreign exchange intervention on 31 July, kicking off an extensive debate about the significance of the first bilateral US-Japan intervention since 1998. Not unrelatedly, despite an undercurrent of dissent, the Liberal Democratic Party (LDP) is prepared to approve Prime Minister Takaichi Sanae’s consumption tax cut. Finally, Prime Minister Takaichi visited earthquake-stricken Kumamoto prefecture and is prepared to begin releasing disaster relief funds.

The Japanese and US governments confirmed that they conducted a joint intervention in foreign exchange markets to strengthen the yen on Friday, 31 July, the first coordinated intervention since 2011 and the first bilateral US-Japan intervention since 1998, which was undertaken to strengthen the yen during the Asian financial crisis. The intervention came after the yen had fallen to nearly JPY 164/USD, a four-decade low.

Both Japanese and US officials heralded the intervention as signifying the strength of the bilateral relationship. US President Donald Trump said the US acted, “Because we have a good relationship with Japan. We’re very strong, very, very strong financially. They are, you know, they have a weakening yen, and they wanted a little bit of help.” US Treasury Secretary Scott Bessent characterized it as the US “[delivering] for America’s trusted partners” and described the joint intervention on X as aimed at “[countering] disorderly yen movements.” Meanwhile, Mimura Atsushi, vice minister of finance for international affairs, said it was the “completion of the US-Japan currency alliance,” while an official MOF statement said that the joint intervention was intended to counter “excessive volatility and disorderly movements in the Japanese yen in recent months.” Finance Minister Katayama Satsuki warned on Monday that the two governments could act “without hesitation” again if necessary, echoing remarks by Bessent.

Treasury Secretary Scott Bessent@SecScottBessent

The Trump Administration delivers for America's trusted partners. Economic security is national security. And the U.S.-Japan alliance is built on both. Friday's coordinated foreign exchange actions countered disorderly yen movements. Treasury remains attentive and in close

11:00 PM · Aug 2, 2026 · 3.18M Views

975 Replies · 2.48K Reposts · 11.3K Likes

The logic behind the US participation seems to have been less about providing relief to Japan and Prime Minister Takaichi Sanae, though it comes at a sensitive moment for Takaichi as she faces falling approval ratings and uproar in the Liberal Democratic Party (LDP) over her consumption tax cut plan (see below), all while trying to shepherd her expansive fiscal ambitions through the budgetary process amid fraying market confidence. Rather, the US may have been concerned about the potential impact on US markets of turmoil in Japan’s markets, particularly with US bond yields climbing; the US Treasury’s sale of euros instead of dollars to buy yen may have been intended to avoid a further selloff in US treasuries, though, as Robin Brooks suggests, this unusual twist could backfire. Of course, Bessent has repeatedly expressed his belief that the yen is undervalued and encouraged the Bank of Japan (BOJ) to hike interest rates faster. As such, the question following this intervention is whether the US expects that this intervention – and possible subsequent interventions using the Foreign and International Monetary Authorities (FIMA) Repo Facility to fund Japan’s interventions – will serve as a bridge to more sustainable changes by the Takaichi government to strengthen the yen, including backing interest rate hikes by the BOJ and perhaps even scaling back some of Takaichi’s more extravagant fiscal ambitions. (Nikkei reports an unnamed US official communicated concerns about a “Truss shock” in Japan to Japanese officials.)1 Both changes seem difficult to imagine at this point, though, as Bessent posted hours before news of the intervention broke, he will be seeing his “longtime friend, Bank of Japan Governor Kazuo Ueda, at the G20 Finance Ministers Meetings…at the end of August,” which could be an opportunity for some frank exchanges about the direction of Japanese monetary policy. Accordingly, expectations of another rate hike in September are rising.

Bessent may have already been thinking about joint intervention when the US Treasury conducted a rate check in January, during the uncertain period leading up to the general election and US and Japanese authorities have been engaged in more active discussions since Bessent visited Japan to talk with Katayama before the US-China leaders’ summit in May. The origins of this intervention may stretch back to when Katayama took office as finance minister last October. The prolonged discussions could point to a more sustained effort, hypothetically buying the Takaichi government and the BOJ more time to make adjustments to macroeconomic policies; perhaps for this reason one analyst told Nikkei that this could be a “Reiwa-era Plaza Accord.” (Mizuho’s Karakama Daisuke discusses these dynamics here.) But many observers expect that the joint intervention will not change market fundamentals and the yen’s weakening will eventually resume. There is substantial reason to question whether Takaichi is able to carry out a u-turn – I wrote about this notion in February – or, as Tama University’s Makabe Akio suggests, whether she truly sees yen weakness as a problem that requires a major course correction. The joint intervention may add a new wrinkle insofar as it signals US urgency about Japan’s macroeconomic policies and perhaps gives Washington more leverage, but it is no guarantee of the kind of changes that analysts suggest are necessary to change the weakening trend in the yen’s value.