US and Japan Team Up to Rescue Plunging Yen

The US and Japan have intervened in currency markets to rescue the plummeting yen, which had reached its weakest level since 1986. The joint operation saw the two governments purchasing yen during US trading on July 31.

The intervention was intended to counter 'excessive volatility and disorderly movements' in the currency, according to Japanese Finance Minister Satsuki Katayama. He stated that Tokyo remained in close contact with the US Treasury and would not hesitate to conduct further joint intervention.

The operation has been compared to a 2011 G7 intervention following the earthquake and tsunami. It is also the first time Washington has directly helped purchase yen to strengthen the Japanese currency since 1998. The yen had fallen to 163.99 against the dollar on July 23 before the suspected interventions drove it sharply higher.

Japan's enormous Treasury portfolio, worth $1.143 trillion in May, was likely used to finance the yen purchases. Analysts estimated that Japan may have spent ¥8.45 trillion (around $53 billion) during Thursday's initial intervention alone. The US Treasury Secretary Scott Bessent described the operation as a matter of both economic security and support for a key American ally.