US-Japan Joint Yen Intervention Remains Ongoing, per Reuters

The US and Japan are still actively coordinating to prop up the yen after last week’s rare joint intervention, and both sides are signaling they are ready to go again. Traders are staying on high alert with USD/JPY sitting well off its 40-year lows.

What Reuters is reporting

Japan and the United States conducted coordinated yen-buying intervention and will not hesitate to take further action, Japan's finance ministry said on Monday, confirming a rare bilateral action to halt the yen's slide to fresh 40-year lows.

Central bank data indicated that Japan may have spent as much as $36.58 billion buying yen during Friday's joint intervention. The U.S. Treasury sold euros to buy yen, three sources familiar with the matter said, though the amount spent was not known.

How the yen has reacted

The yen surged more than 1% to 155.20 per dollar after the announcement, its strongest since early May and well off the 40-year low near 164 hit last month. It was trading around 157 per dollar late on Monday.

The coordinated intervention was the first U.S.-Japan joint operation to buy yen since 1998.

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Why Washington got involved

The intervention underscored both countries' resolve to prevent a selloff in the yen and Japanese government bonds from causing global spillovers, such as adding upward pressure on already rising U.S. Treasury yields.

Bessent also endorsed Tokyo's broader policy direction, saying the U.S. strongly supports Japan's decisive market and monetary steps to correct the substantial undervaluation of the yen. The ministry also announced plans to utilize the Federal Reserve's foreign and international monetary authorities repo facility in the future. The FIMA repo facility allows approved foreign central banks and monetary authorities to obtain short-term dollars by temporarily exchanging U.S. Treasury securities.

What officials are saying

The Japanese Ministry of Finance said it remains attentive and in close communication with counterparts at the U.S. Treasury, adding it will not hesitate to conduct further joint intervention.

They wanted a little bit of help, and we're always there for Japan, Trump told reporters aboard Air Force One on Sunday, citing the good relationship between the two allies. More than anything else, it was a signal of friendship, he said.

Options market and stocks to watch

A firmer yen and lower USD/JPY tends to ripple through equities tied to Japan exposure, Treasury yields, and the dollar. Watch for:

• EWJ — the iShares Japan ETF is directly sensitive to yen strength and any follow-through action from the MOF.
• UUP — dollar index proxy; further coordinated selling pressures the DXY.
• TLT — a stabilizing yen and JGB market could ease upward pressure on long-duration US Treasury yields.
• TM — Toyota and other Japanese exporters see margins squeezed if the yen appreciates further.
• GS — reportedly involved in executing the operation via the NY Fed, worth watching for FX desk flow. See other news for related coverage.

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