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Mumbai.America Buys Japanese Yen After 15 Years to Lift Currency From Historic Lows, Trump Backs Intervention

The United States has stepped into the foreign exchange market to buy the Japanese yen for the first time in nearly 15 years, joining Japan in an attempt to halt the currency's sharp fall against the US dollar. Announcing the move, US President Donald Trump said Japan's currency had become excessively weak and required support. The coordinated intervention comes after the yen touched its weakest level against the dollar in four decades, raising concerns over financial market stability and the broader global economy.

Yen rescue marks rare coordinated action

The joint intervention follows the yen's slide to around 164 against the dollar last week, its weakest level in nearly 40 years. To prevent further depreciation and curb excessive market volatility, Washington and Tokyo jointly entered the currency market.

This is the first coordinated currency intervention by the two countries since 2011. Back then, the action was aimed at weakening the yen after Japan's devastating earthquake and tsunami. This time, however, the objective is exactly the opposite — to stop the currency from falling further and discourage speculative trading.

• Japan and the US jointly intervened after the yen hit a 40-year low.
• It is the first coordinated currency market action between the two nations since 2011.
• The primary aim is to stabilise the yen and reduce speculative pressure.

Billions deployed to support Japanese currency

According to the Bank of Japan, Tokyo sold nearly $59 billion to purchase yen in the New York market just before Friday's official joint intervention. While the US Treasury has not disclosed its exact purchase amount, a photograph of Treasury Secretary Scott Bessent's notebook during a Cabinet meeting hinted at plans to buy between $5 billion and $10 billion worth of Japanese yen.

Japanese officials said the intervention has already helped contain the currency's excessive fluctuations. Bessent also said the coordinated action had succeeded in checking disorderly market movements, adding that Washington fully supports Japan's monetary and market measures to correct the yen's steep decline.

Why America also has a stake

Experts believe the US joined the intervention because stabilising the yen also serves American economic interests. Shigeto Nagai, Head of Japan Economics at Oxford Economics, said a continued sell-off in the yen and Japanese government bonds could have disrupted global financial markets and increased borrowing costs for Washington.

Trump echoed that position while speaking to reporters, saying Japan needed assistance because its currency had weakened sharply. "We are always ready to help Japan," he said. Following his remarks, the dollar slipped about 0.2% to around 157.07 yen, recovering significantly from last month's low near 164.

• A stronger yen could reduce instability across global financial markets.
• The intervention also protects US borrowing conditions and investor confidence.
• Currency markets reacted immediately with the dollar easing against the yen.

Low interest rates and global tensions behind slide

Economists say Japan's prolonged ultra-low interest rate policy has been one of the biggest reasons behind the yen's weakness. Even after raising rates in 2024, Japanese borrowing costs remained far below those in other major economies.

This encouraged investors to borrow cheaply in yen and invest in higher-yielding assets elsewhere. Large overseas investments by Japanese companies and the decision to retain profits abroad also weakened demand for the domestic currency.

The recent conflict involving Iran further worsened the situation. Keio University professor Sayuri Shirai said higher oil and gas prices hurt Japan's import-dependent economy, widened trade imbalances and slowed the yen's recovery.

Markets may need more interventions ahead

Analysts believe the latest intervention may provide short-term relief but is unlikely to permanently reverse the yen's long-term weakness. Bank of America Securities economist Shusuke Yamada said currency purchases generally have only a temporary impact unless backed by broader economic changes.

Barclays also expects the immediate effect to be positive but warns that downward pressure on the yen could persist over time. Officials from both Japan's Finance Ministry and the US Treasury have indicated they are prepared to intervene again if market conditions demand.

• Experts expect further coordinated interventions if volatility returns.
• Long-term recovery will depend on interest rates and economic fundamentals.
• Markets will closely watch future policy moves from both governments.