Investing.com — Japanese Finance Minister Satsuki Katayama will announce on Monday that Tokyo and Washington jointly intervened in currency markets to halt the yen’s slide to 40-year lows, two Japanese government officials told Reuters exclusively.
Katayama is expected to stress that both governments are prepared to counter what they view as excessive declines in the Japanese currency.
One official confirmed that the announcement would refer to “joint action” and said the operation remained ongoing.
The move would mark the first coordinated currency intervention by Japan and the U.S. since 2011. Market participants said authorities from both countries conducted rounds of yen buying after the currency fell to its weakest level against the dollar since 1986.
Japan carried out yen-buying and dollar-selling operations during New York trading hours on Thursday, according to a market source.
The action came shortly before the Bank of Japan left monetary policy unchanged on Friday but signalled a strong possibility of raising interest rates soon.
A rate increase would narrow the yield gap between Japanese and U.S. assets, potentially making the yen more attractive to investors.
Evidence of Washington’s involvement also emerged during a Friday cabinet meeting. U.S. Treasury Secretary Scott Bessent was photographed with a notepad listing a task to purchase between $5 billion and $10 billion worth of yen.
Bessent had said last week that the Japanese currency appeared significantly undervalued.
The U.S. Treasury separately informed several banks on Friday that it could intervene and instructed them to be prepared for further action, according to a person familiar with the matter.
Japan’s Ministry of Finance and the U.S. Treasury did not immediately respond to requests for comment.
A stronger yen could weigh on Japanese exporters by reducing the domestic value of overseas earnings. It could also lower import costs and ease inflationary pressure from energy and raw materials.
Continued intervention may increase volatility in USD/JPY and force investors holding large short-yen positions to unwind their trades.
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