US and Japan jointly intervene to prop up yen in rare move

The United States and Japan recently initiated a rare joint intervention in currency markets to bolster the Japanese yen, which had plunged to a 40-year low against the dollar. Japan's government and the Bank of Japan began buying yen on July 30, 2026, with the U.S. Treasury joining the effort on July 31, 2026, by selling euros and purchasing yen. This coordinated action, confirmed by both nations, was prompted by the yen's depreciation to approximately 164 per dollar, a level not seen since 1986, which fueled concerns about rising import costs and inflation in Japan.

This marks the first time in over 30 years that Washington and Tokyo have jointly intervened to strengthen the yen, highlighting the severity of the currency's decline. U.S. President Donald Trump characterized America's participation as a gesture of friendship and beneficial for global economic stability. Following the intervention, the yen saw a recovery, strengthening to roughly 157 per dollar.

Both Japanese and U.S. officials have signaled their willingness to undertake further interventions if necessary to counter excessive market volatility. The move also aims to prevent potential global economic spillovers, including upward pressure on U.S. Treasury yields, stemming from the yen's weakness and instability in Japanese government bonds.