The U.S. and Japan have taken the rare step of intervening together in the currency market, buying yen after the battered currency’s prolonged decline against the U.S. dollar. Sharp movements in the yen can affect Japanese demand for American assets, the cost of hedging dollar investments and conditions in the Treasury market.
The move followed a slide that carried the dollar above ¥163, its strongest level against the Japanese currency in roughly four decades. After the intervention was confirmed, the dollar fell toward ¥155.
But the U.S. participation is unusual.
The last time the United States and Japan jointly intervened to strengthen the yen was June 1998. The U.S. also intervened in March 2011, but in the opposite direction, joining a G7 operation that sold yen after Japan’s earthquake and tsunami.
Currency intervention is normally left to national authorities acting in their own markets.
But in this case both countries want to prevent abrupt currency exchange-rate movement that could spill over to trade flows, impact inflation and influence global financial markets.
A closer look at numbers can provide a partial picture as to why the intervention took place.
Japanese investors held nearly $3 trillion in U.S. portfolio securities as of June 2025, representing 8.2% of all foreign holdings, according to U.S. Treasury Department data. That total includes assets held by Japanese banks, insurers, pension funds and other private investors; it is not money controlled by Japan’s government or fully available for currency intervention.
Investors reported in the U.K., Cayman Islands and Canada held more overall. Japan, however, remained the largest foreign holder of U.S. Treasury securities.
The two governments had already established a framework for action.
In September 2025, the finance ministers of both countries said intervention could be appropriate to combat “excess volatility and disorderly movements,” while maintaining that exchange rates should generally be determined by markets.
Whether the latest operation produces a lasting recovery remains uncertain. The large interest-rate gap between the U.S. and Japan continues to encourage investors to favor dollar-denominated assets.
Bottom line
Intervention can slow a disorderly decline, but given Japan’s economic history, changing the yen’s longer-term direction may require a shift in those underlying economic forces.