US, Japan Buy $5 Billion-$10 Billion of Yen to Curb Rate Pressure
Updated
Updated · The Seattle Times · Aug 4
US, Japan Buy $5 Billion-$10 Billion of Yen to Curb Rate Pressure
3 articles · Updated · The Seattle Times · Aug 4
Summary
$5 billion to $10 billion of yen purchases appeared on Scott Bessent’s notepad, offering the clearest estimate yet of last week’s joint U.S.-Japan intervention after the currency slid to a 40-year low near 164 per dollar.
U.S. officials used euro holdings rather than dollars to buy yen, aiming to avoid undermining the greenback while easing pressure on Japan to sell Treasurys to defend its currency.
That matters because Japan is the largest foreign holder of U.S. debt, and Treasury fears forced sales could push up U.S. borrowing costs as high mortgage and auto-loan rates already weigh on voters.
Bessent said Washington would join another intervention if needed and also urged expanding the Federal Reserve’s foreign repo facility, framing yen stability as support for both regional allies and the U.S. bond market.
Critics including former Treasury officials and economists said the move may only temporarily lift the yen, arguing Japan’s heavy public debt—not speculation—is the deeper driver of its weakness.
Why did the US suddenly buy billions in yen after thirty years, and is it secretly protecting its own fragile bond market?
Could Japan's rising domestic bond yields trigger a massive capital exodus from American markets despite this unprecedented coordinated intervention?
Breaking the 40-Year Yen Low: Inside the $60 Billion US-Japan Joint Intervention of 2026
Overview
In 2026, a mix of Japan’s huge public debt, limited ability to raise interest rates, and a global energy shock from the U.S.-Israeli war with Iran caused the yen to plunge to a 39-year low. This led to soaring import prices and a cost-of-living crisis in Japan. Fearing a sell-off of U.S. Treasuries and a crash in equity markets, the U.S. joined Japan in a rare, coordinated currency intervention. Their joint action quickly strengthened the yen, disrupted speculative trading, and stabilized global markets, while using the Federal Reserve’s FIMA Repo facility to avoid pressure on U.S. bond yields.