The US Treasury executed a significant intervention in the yen market, marking the first joint effort with Japan in nearly 30 years to support its currency. The intervention involved the Federal Reserve Bank of New York selling euros to purchase yen, amid the yen hitting a record low against the dollar. Treasury Secretary Scott Bessent emphasized close cooperation between the US and Japan. Analysts indicated that the yen had recently strengthened due to speculation of Japanese government intervention after a weakening against the dollar. The Bank of Japan maintained interest rates but hinted at possible future adjustments due to inflation concerns. This intervention follows a history of US involvement in Japan's currency strategies, reflecting ongoing economic challenges.

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US Treasury undertakes historic intervention in yen market

New York Fed sells euros to buy yen following recent speculation that Tokyo intervened to support Japan’s currency

Treasury secretary Scott Bessent says the US and Japan ‘continue to enjoy a strong relationship and close co-ordination’© Magnus Lejhall/EPA/Shutterstock

Kate Duguid in New York, Claire Jones in Washington, Katie Martin and Ian Smith in London and David Keohane in Tokyo

PublishedJuly 31 2026

UpdatedAugust 1 2026

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The US Treasury intervened in yen exchange rates on Friday, marking the first time Tokyo and Washington joined forces to support the Japanese currency via outright purchases in nearly 30 years.

The Federal Reserve Bank of New York undertook the unusual move of conducting a sale of euros to buy yen on behalf of the Treasury, according to three people familiar with the matter.

The sales were conducted through Goldman Sachs and Morgan Stanley, according to two of those people.

The Treasury had earlier told several banks on Wall Street that it was considering an intervention to support the Japanese currency, which on July 23 hit its weakest level against the dollar since 1986.

US authorities were in touch with European Central Bank officials about the move, according to people familiar with the matter.

The New York Fed and Goldman Sachs declined to comment. The Treasury department and Morgan Stanley did not immediately respond to a request for comment.

The yen has strengthened over the past half-dozen sessions, with the dollar weakening about 4 per cent on Thursday as market participants speculated that the Japanese government had also moved to support the currency after a rise in trading volumes. The dollar shed 1.9 per cent on Friday to buy ¥157.57.

Analysts using official data and broker estimates said Thursday’s intervention by Japanese authorities was likely to be about ¥8.45tn ($52.8bn).

The Treasury’s intervention to bolster the yen is the first since 1998, when it bought the currency in order to strengthen Japan’s economy after the yen had dropped to eight-year lows. The US intervened in Japan’s currency in 2011 to weaken it as part of a co-ordinated international effort to prevent a dangerous currency appreciation after the Tohoku earthquake and tsunami.

Earlier on Friday, Treasury secretary Scott Bessent posted on X that he looked forward to “seeing my longtime friend, Bank of Japan governor Kazuo Ueda” at the G20 finance ministers’ meeting in North Carolina in August. He added that the two countries “continue to enjoy a strong relationship and close co-ordination”.

The moves came after the BoJ held interest rates at 1 per cent on Friday, as widely expected by market participants. Ueda said he would ensure the central bank did not “fall behind the curve” and could speed up rate rises, something being closely watched by FX traders.

“Given that underlying inflation is approaching our 2 per cent price stability target, we believe there is a greater need than before to pay attention to upside risks to inflation,” Ueda said. “With that assessment in mind, we intend to discuss these issues carefully at future monetary policy meetings.”

Traders are putting a roughly 40 per cent chance of a quarter-point rise in the BoJ’s policy rate in September, according to derivatives markets, up from 30 per cent earlier in the week.

Ueda has faced criticism from investors over his failure to raise rates more quickly, with some warning that the BoJ risks losing credibility in financial markets if it does not speed up.

Line chart of ¥ per $, inverted scale showing Big swings in the yen

On Thursday, the New York Fed conducted a so-called rate check on dollar-yen on behalf of the US Treasury, according to people familiar with the matter. Asking currency-dealing banks for the current exchange rate is typically seen as a precursor to direct foreign-exchange purchases. The New York Fed made a similar move in January.

Investor fears about rising oil prices and how Japan’s Prime Minister Sanae Takaichi can afford her fiscal stimulus plans recently pushed the yen towards 40-year lows near ¥164 to the dollar. Following the end of Ueda’s press conference on Friday, the yen strengthened sharply to less than ¥159 against the US dollar, sparking speculation that the Ministry of Finance had intervened in markets.

“It looks like [another intervention], but smaller in scale,” said one FX banker. “As we have seen in past episodes, they intervene more than once.”

Thursday’s intervention would be the first since a series of moves by the government in April and May that involved ¥11.7tn being spent to prop up the currency. This time, due in part to co-ordination with the US, some analysts said the gains had a better chance of being maintained, at least in the short term.

Atsushi Mimura, Japan’s vice-minister of finance for international affairs, said: “We understand that we are receiving support from the US authorities that goes beyond mere moral support. We have been in constant contact with them.”

Osamu Takashima, foreign exchange strategist at Citigroup in Tokyo, said it was unlikely that the yen would weaken once more to ¥164 to the dollar “in the very near term” because it seemed the US was willing to help Japan defend its currency.

He added that since the market would be wary of further intervention, “dollar-yen upside is probably limited for now”.

But others have said that any intervention by Japanese authorities will struggle to provide lasting support to the currency without assistance from higher interest rate expectations, especially as the Fed is widely expected by the market to raise rates in the coming months, lifting the dollar.

One banker in Asia said clients were already testing the government’s commitment, putting on yen short positions with targets around ¥162.

Additional reporting by Jill Shah

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