Bessent vows to repeat joint yen intervention, urges bigger Fed backstop

The United States and Japan confirmed on Sunday that they conducted a coordinated yen-buying intervention on Friday — the first joint currency market action by the two countries in 15 years — to counter what officials described as "excessive volatility and disorderly movements" in the Japanese currency.reuters+1

The announcement came after President Trump told reporters aboard Air Force One that Washington stepped in to support the yen as "a signal of friendship" with Japan. "They have a weakening yen, and they wanted a little bit of help. And we're always there for Japan," Trump said.businesstimes+1

A Coordinated Stand Against Yen Weakness

Japanese Finance Minister Satsuki Katayama confirmed the bilateral operation in a statement on Monday, saying it was based on a joint statement issued last September by the two countries' finance chiefs. She added that her ministry "will not hesitate to conduct further joint intervention."marketscreener+1

Treasury Secretary Scott Bessent echoed that resolve in a post on X, stating Washington "will not hesitate to participate in further joint intervention" and that the U.S. "strongly support[s] Japan's decisive market and monetary steps to correct the substantial undervaluation of the yen."reuters

The yen had plunged to nearly 164 per dollar late in July — its weakest level in roughly 40 years — before the intervention pushed it back to approximately 157 per dollar. Bank of Japan data indicated that Japan may have sold as much as $58.97 billion to buy yen when it intervened in New York markets on Thursday, followed by Friday's confirmed joint operation.nytimes+3

Fed Facility and Broader Coordination

Bessent indicated that the Federal Reserve's Foreign and International Monetary Authorities Repo Facility was used in the coordinated action and called for it to be "upsized in the coming months." The facility, created during the COVID-19 pandemic, allows foreign central banks holding Treasuries at the New York Fed to obtain up to $60 billion in short-term dollar loans — enabling Japan to fund yen purchases without selling its $1.14 trillion in U.S. Treasury holdings outright.reuters

In a sign of broader regional coordination, South Korea also stepped in to buy its won currency on Thursday. The Bank of Japan on Friday offered its most explicit signal to date of an early rate hike, even as it held policy steady — aligning with Bessent's repeated calls for higher Japanese interest rates.aljazeera+1

What Comes Next

The last time the U.S. and Japan jointly intervened was in 2011, when they acted to weaken the yen after a devastating earthquake. The last coordinated yen-buying operation was in 1998 during Asia's financial crisis. Analysts cautioned that while coordinated intervention carries greater market credibility than unilateral action, sustained yen recovery will ultimately require a narrowing of the interest-rate gap between the two countries.nippon+2