Japan, US Unite Against Weak Yen Amid Record-Setting Intervention

Japan's finance minister and top currency diplomat have emphasized the need for closer coordination with the US Treasury to address the yen's persistent weakness. This comes after a record-breaking intervention in April-May 2026, where Japan deployed ¥11.73 trillion ($72.4 billion) in direct currency intervention. The coordination framework is built on a formal FX coordination memorandum signed in September 2025.

The yen has been under pressure due to the significant rate gap between the US and Japan. The Federal Reserve's policy rate of 3.50-3.75% far exceeds the Bank of Japan's 0.75%, making it attractive for carry traders to borrow in yen at rock-bottom rates and invest in dollar-denominated assets.

In response, Japanese corporations are diversifying their treasury assets away from yen-denominated holdings, with some even incorporating Bitcoin into their corporate reserves as a non-sovereign store of value. Metaplanet, a publicly traded Japanese firm, has taken this step, citing the growing recognition of persistent currency devaluation.