US and Japan Jointly Buy Yen to Halt Its Slide, First Coordinated Intervention Since 2011

The United States Treasury bought Japanese yen on Friday, its first yen-buying operation alongside Tokyo in more than a decade, after the currency fell close to its weakest level against the dollar since 1986. The Federal Reserve Bank of New York carried out the purchases by selling euros for yen through Goldman Sachs and Morgan Stanley, acting on the Treasury's instruction.

Israeli financial outlet Globes reported that a photograph of Treasury Secretary Scott Bessent showed a notepad listing an instruction to buy between $5 billion and $10 billion of yen, and that Bessent had called the currency significantly undervalued the previous week. By the close of New York trading on Friday, the yen stood at 157.40 to the dollar, its strongest level since early May, having traded near four-decade lows only two days earlier. Japanese Finance Minister Satsuki Katayama is expected to confirm the joint operation on Monday, the first coordinated action by the two governments since 2011.

The intervention addresses a symptom rather than the cause. The yen's long decline followed years of very loose Bank of Japan policy and a widening gap between Japanese and American interest rates, which drew investment out of the yen and into the dollar. Buying the currency on the open market does not narrow that gap. It signals that the strong dollar has reached a level Washington itself now judges disruptive, even as United States data continues to support expectations that the Federal Reserve will keep policy tight.

Coordinated intervention is a rare tool, used only when officials conclude that a currency has moved beyond what economic fundamentals justify and threatens financial stability. That two of the world's largest economies acted together, rather than Japan acting alone, marks a change in how far authorities will go to manage the consequences of diverging monetary policy.