Japan, US estimated to have jointly intervened in forex market in up to 7 trillion yen move

The Japanese government and the Bank of Japan are estimated to have intervened in foreign exchange markets to defend the yen, with the scale of the operation put at as much as 7 trillion yen ($43.8 billion).

According to Yonhap, Japanese media outlets including the Yomiuri Shimbun and the Nikkei estimated the intervention at between 6 trillion and 7 trillion yen, based on the Bank of Japan's Friday projection of current account balances as of Monday.

The "fiscal and other factors" item — which fluctuates when currency intervention occurs — showed a decline of 8.2 trillion yen, exceeding market expectations of 1 trillion to 2 trillion yen. Analysts said the difference was deployed in yen purchases and dollar sales.

On Thursday, the yen strengthened sharply against the dollar in New York foreign exchange trading, briefly touching 157.80 yen per dollar — its strongest level in roughly two months. The rate fell more than 2 percent in about 50 minutes, marking a sudden yen appreciation.

In Tokyo trading on Friday, the dollar briefly rebounded into the 160-yen range before the yen-dollar rate fell back to the upper 158-yen range around 6 p.m.

Market experts interpreted the moves as an unusually coordinated, simultaneous intervention by the Japanese and US governments to stem the yen's weakness.

NHK reported that the US Treasury Department, acting through the Federal Reserve Bank of New York, notified multiple banks on Friday of a possible market intervention through yen purchases and asked them to prepare for further action. Kyodo News, citing Reuters, also reported that US Treasury Secretary Scott Bessent was seen carrying a note at a Cabinet meeting that day referencing yen purchases in the range of $5 billion to $10 billion.

It was the first time Japanese authorities had intervened in the currency market in roughly three months, since late April and early May. At that time, they were reported to have deployed a record total of 11.7 trillion yen across multiple rounds of intervention. Despite that large-scale effort, the yen's weakness persisted until recently.

Yamamoto Masafumi, chief foreign exchange strategist at Mizuho Securities, told the Mainichi Shimbun that the yen-strengthening effect of the latest intervention was unlikely to last, citing the Takaichi Sanae administration's aggressive fiscal policy and accommodative monetary conditions as the underlying drivers of yen weakness.