Japanese yen drops to 40-year low, US dollar weakens after market interventions

The Japanese yen recently plummeted to a 40-year low against the U.S. dollar, reaching nearly ¥164 per dollar last week, a level not seen since 1986. This significant depreciation prompted a rare joint market intervention by the United States and Japan. The coordinated effort, which involved buying yen to strengthen the currency, took place on Friday, July 31, 2026, with official confirmations and statements released on Monday, August 3, 2026.

Both nations confirmed their readiness for further action if necessary to counter excessive volatility and disorderly movements in the yen. Japanese Finance Minister Satsuki Katayama stated that the intervention aimed to stabilize the currency amidst concerns over rising import costs and inflation within Japan. U.S. President Donald Trump and Treasury Secretary Scott Bessent affirmed American involvement, citing friendship and U.S. interests in preventing its trade deficit from widening and avoiding disruptions in the U.S. Treasury market.

This marks the first joint U.S.-Japan intervention to strengthen the yen since the 1998 Asian financial crisis, and the first coordinated currency intervention between the two countries since 2011, when the aim was to weaken the yen following a devastating earthquake. The yen's prolonged weakness has been attributed to factors such as the substantial interest-rate differential between Japan and the U.S., as well as the impact of rising oil prices.