US and Japan Unite to Counter Yen Volatility

The US Treasury and Japan's Ministry of Finance have confirmed that they coordinated a joint yen-buying operation to counter excessive volatility in the currency. This move was made under a September 2025 agreement between the two countries, which allows for coordinated action during periods of market disruption.

According to Scott Bessent, Treasury Secretary, the US and Japan are 'trusted partners' and will not hesitate to participate in further joint intervention if disorderly market conditions continue. He described the yen's undervaluation as substantial and expressed support for Japan's efforts to address it.

The coordinated messaging from Washington and Tokyo may be aimed at influencing markets rather than just intervening, according to economist Mohamed El-Erian. He suggested that the two countries are using 'strong words as a substitute for actual market intervention' to discourage investors from testing policymakers' resolve while buying time for Japan's broader policy measures to take effect.

The yen has been under pressure in recent weeks, weakening beyond 163 against the US dollar, its lowest level in nearly four decades. At the time of writing, it would take 156.49 yen to buy a single US dollar.