FXTRADING Financial Focus (Asia-Pacific 08/04)US-Japan Joint Action Puts Yen at Key Turning Point

The Japanese Ministry of Finance confirmed on Monday that Japan and the US Treasury conducted a coordinated yen-buying operation last Friday, marking a rare bilateral currency cooperation action in recent years. The move was not a unilateral attempt to stabilize the market, but rather an action carried out based on prior communication between the two countries, with the main objective of reducing the risk of sharp short-term yen volatility and preventing disorderly market movements.

Behind the joint intervention is Japan‘s continued concern over the yen’s prolonged weakness. The yen against the US dollar recently fell to around a 40-year low, with rising import costs, increasing pressure on household living expenses, and expanding inflation risks prompting Japanese authorities to strengthen policy responses. The Japanese Ministry of Finance stated that the current focus is not on countering normal market fluctuations, but on preventing exchange rates from deviating excessively from underlying fundamentals.

Japan emphasized that further coordinated actions could be taken if significant market volatility emerges in the future. Finance Minister Satsuki Katayama stated that Japan will continue monitoring foreign exchange market developments and maintain close communication with the US Treasury to prepare for potential future measures. This indicates that Japan hopes to enhance policy effectiveness through international coordination rather than bearing the pressure of currency stabilization alone.

According to information released by Japan‘s Ministry of Finance, the operation was conducted under the framework of the Japan-US Finance Ministers’ Joint Statement issued in September 2025. Both sides believe that recent market volatility has affected exchange rate stability, making cooperation-based intervention necessary. Meanwhile, Japan plans to utilize the Federal Reserve‘s Foreign and International Monetary Authorities (FIMA) Repo Facility in the future, allowing eligible foreign central banks to obtain short-term US dollar liquidity by using US Treasury securities as collateral, thereby strengthening the financial system’s ability to respond to unexpected market disruptions.

US Treasury Secretary Bessent later confirmed that the US Treasury participated in the coordinated action and stated that both sides would continue maintaining communication. He noted that the US is concerned about recent instability in the foreign exchange market and supports Japan‘s efforts to take necessary measures to improve market order. At the same time, the US recognizes Japan’s efforts to address economic pressures through policy adjustments, viewing financial stability as being in the shared interests of both countries.

US President Donald Trump had previously stated publicly that US participation in the operation reflects support for its alliance with Japan and also helps maintain global economic stability. He emphasized that the US is willing to provide assistance when Japan seeks cooperation. This statement further signals closer coordination between the two countries in the areas of exchange rates and financial stability, while also showing that major global economies are increasingly inclined to reduce risks through cooperation when facing significant market volatility.

From FXTRADINGs perspective, the joint US-Japan intervention demonstrates that major economies are strengthening policy coordination to address abnormal market fluctuations. Going forward, market attention will focus not only on the effectiveness of this single operation, but also on whether a more stable communication mechanism can be established between central banks and fiscal authorities. As the global economic environment becomes increasingly complex, policy transparency, international cooperation, and liquidity management capabilities will become key factors influencing financial market stability.