31/07/2026
Ahead of the Bank of Japan’s policy decision, Japanese authorities stepped into the foreign exchange market for pre-emptive intervention to prop up the yen, with apparent backing from the United States. The unusual coordinated move disrupted prevailing market trading momentum.
During Thursday’s New York trading session, the yen surged by as much as 3.3% against the U.S. dollar, marking its strongest single-day gain since December 2023. According to people familiar with the matter, Tokyo intervened to support the yen through dollar-selling, yen-buying operations. U.S. authorities conducted rate checks around 2:30 a.m. Tokyo time in a coordinated move with Japan.
U.S. participation amplified the effectiveness of the intervention and has made currency traders more cautious. U.S. Treasury Secretary Scott Bessent stated in an interview with Fox Business that the yen is “substantially undervalued” and that excessive market volatility is unsound. Senior Japanese currency official Atsushi Mimura confirmed on Friday that U.S. support extended beyond moral backing and included tangible coordination.
As previously reported by the Nikkei, Japanese authorities carried out forex intervention, while U.S. officials requested dollar-yen quote checks. At 9:51 a.m. Tokyo time, the USD/JPY pair stood at 160.67, recovering from a Thursday low of 157.98. Nevertheless, the yen has still fallen approximately 6% against the dollar over the past 12 months, ranking as the worst-performing currency among the Group of Ten.
Japanese Finance Minister Satsuki Katayama declined to confirm or deny the intervention, reiterating that authorities remain highly vigilant and stand ready to respond urgently to excessive currency moves. The U.S. Treasury Department did not respond to requests for comment.
The yen has slumped to four-decade lows in recent months, pressured by rising oil prices, persistent fiscal deficits in Japan, and a widening Japan-U.S. interest rate differential. Even a record intervention of 11.73 trillion yen (roughly $73.4 billion) conducted by Japanese authorities last quarter failed to reverse the currency’s downtrend. Reserve data from Japan’s Ministry of Finance suggests the latest intervention was likely funded by liquidating foreign securities holdings, including U.S. Treasury bonds.
Japan’s unprecedentedly large market interventions underscore the severe financial risks stemming from yen depreciation, as well as the difficulty of fighting prevailing market trends in the $9.5 trillion daily global foreign exchange market.
After abstaining from forex intervention for 25 years, Japan resumed yen-support operations in 2022 and 2024 to curb the currency’s relentless depreciation. The prolonged yen weakness originated in the post-pandemic inflation cycle, when major global central banks raised interest rates aggressively while the Bank of Japan maintained negative rates to stimulate domestic growth. The resulting policy divergence widened rate differentials and triggered sustained yen declines.
The yen’s latest rebound comes on the eve of the Bank of Japan’s Friday policy announcement. Markets widely expect the central bank to keep interest rates on hold following a rate hike last month, which lifted the benchmark rate to its highest level since 1995. Even so, investors continue to question the BOJ’s tardy response to domestic inflationary pressures.
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