US, Japan Say 'Ready to Act Again' to Support Yen

The yen has been weakening because of the gap between Japanese and US interest rates — fueling the yen "carry trade" by investors — as well as concerns about Japan's colossal debts under new Prime Minister Sanae Takaichi.

The scale of the joint operation on July 31 was not known, but it was the first since 2011 when the United States and Japan — and other G7 members — sold yen to stop it rising after a huge earthquake. 

The last time Washington and Tokyo bought yen was 1998, Japan's finance minister said.

U.S. President Donald Trump confirmed the concerted action aboard Air Force One on Aug. 2, calling it a "signal of friendship" with Japan and "good for the world economy."

"And we're always there for Japan. Japan's been very good to us, with the exception, of course, of Pearl Harbor," Trump added.

"We will not hesitate to participate in further joint intervention," U.S. Treasury Secretary Scott Bessent said, adding that the U.S. officials "strongly support Japan's decisive market and monetary steps to correct the substantial undervaluation of the yen."

"The Takaichi government is moving into an exciting new phase of Abenomics, as nearly 15 years of powerful stimulus have created durable, robust underlying economic dynamics," he added.

This referred to the combination of aggressive monetary easing, fiscal stimulus, and structural reforms under assassinated former premier Shinzo Abe, a figure greatly admired by Japan's first woman leader Takaichi.

The intervention came after the yen hit 163.99 per dollar last month, its weakest level since 1986. On Friday it soared to 157.40, the strongest since early May, and on Monday briefly touched 155.23, prompting speculation of another intervention.

"This joint action... countered excessive volatility and disorderly movements in the Japanese yen in recent months," Japan's Finance Minister Satsuki Katayama said. She added that Tokyo had "received very high praise for robustly revitalising and boosting the economy."

"This is the first time since 1998 that Japan and the U.S. conducted coordinated intervention to buy the yen, so naturally, both countries made their own assessments and decided that such intervention was necessary, which is why they acted in concert," Satayama said.

While good for its big exporters like Sony and Toyota, a weak yen inflates import costs for resource-poor Japan, especially oil just as the war strangles supplies from the Gulf.