US, Japan coordinated to stabilize the yen

The United States and Japan coordinated to intervene in the currency markets to stabilize the weakening yen last week, a rare move that last occurred more than a decade ago.

President Donald Trump confirmed Sunday evening that the Treasury Department had assisted its Japanese counterparts. Satsuki Katayama, Japan’s finance minister, said in a statement that the joint action was taken to counter “excessive volatility and disorderly movements in the Japanese yen in recent months.”

The yen has steadily weakened against the U.S. dollar this year, as investors have become concerned about the government’s increasing spending, amplified by higher oil costs stemming from the U.S. war with Iran. The exchange rate fell to its weakest since the early 1980s in July, with $1 worth more than 163 yen, up from around 147 yen a year ago.

The Financial Times, citing sources, first reported last week that the United States had sold euros to buy yen, helping to strengthen the currency. By the end of the week, the exchange rate had fallen to 157 yen per dollar.

The standing of the U.S. dollar relative to other major currencies is a delicate matter. Trump has complained that an overpriced dollar has made American exports more expensive for consumers abroad. But it remains critical to the United States that the dollar retain its status as the world’s principal reserve currency — what businesses, banks and people use to price goods and settle accounts.

A weak Japanese currency helps support Japan’s export-led economy. But the weak currency has also hurt Japan’s economy when it comes to imports like oil. Because oil is typically traded on international markets in dollars, Japan is not only dealing with the rise in oil prices in recent months but must also use more yen to buy that oil.

The yen, along with many other Asian currencies, has tumbled against a strengthening dollar. Starting in April, Japan’s finance ministry has spent tens of billions of dollars buying yen to prop up the currency, with limited success.

Speaking to reporters on Monday morning in Tokyo, Katayama said the government’s view is that the Japanese yen is undervalued, given the success that Prime Minister Sanae Takaichi has had in revitalizing the economy.

Despite falling over the past month, the Nikkei 225, the Japanese benchmark stock index, remains almost 30% higher this year.

The United States last intervened in Japanese markets in coordination with Japanese authorities over a decade ago, in 2011. But at that time, the goal was to weaken the currency after a severe earthquake had led to a surge in the yen’s value, prompting a coordinated international effort to try to weaken it again. The Treasury Department also helped support the yen in 1998 after it had weakened significantly.

Trump was asked on Sunday why the Treasury Department had taken the step this time.

“To support the Japanese currency,” he said after he landed at Andrews Air Force Base in Maryland. “Because we have a good relationship with Japan. We’re very strong, very, very strong financially.”

He added: “Japan’s been very good to us, with the exception, of course, of Pearl Harbor.”

Treasury Secretary Scott Bessent also noted the intervention in a post on the social platform X on Sunday night. “Friday’s coordinated foreign exchange actions countered disorderly yen movements,” he wrote, adding, “We will not hesitate to participate in further joint intervention.”

Katayama said Japan’s finance ministry “remains attentive and in close communication” with the Treasury Department.

Some analysts warned last week, amid indications of official intervention in the market, that continued intervention alone would not be enough to outweigh the underlying causes of the yen’s weakness.

“The intervention highlights growing official determination to defend the currency, but equally underscores the limits of relying on FX operations alone,” analysts at Wells Fargo said.

This article originally appeared in The New York Times.