Japan deploys 15.4 trillion yen in joint currency defense as dollar rebounds past 160

Currency operations reach new peak

The Japanese Ministry of Finance announced on Friday, August 28, that government authorities deployed 15,399.3 billion yen (between $96.4 billion and $98.7 billion) in foreign exchange market interventions from July 30 through August 26, 2026. The figure establishes the largest monthly sum spent by Japan on yen-buying and dollar-selling operations. The actions followed currency purchases conducted during Japan's Golden Week holiday period between late April and early May 2026, when authorities spent 11,734.9 billion yen. With the latest operations included, cumulative intervention spending for 2026 has exceeded 27 trillion yen, well above the previous annual high of roughly 15 trillion yen recorded in 2024.

Bilateral intervention with the United States

The July measures included rare bilateral coordination between Tokyo and Washington. Japanese Finance Minister Satsuki Katayama and US Treasury Secretary Scott Bessent confirmed on August 3 that their governments conducted a joint yen-buying, dollar-selling intervention on July 31, representing the first joint currency action between the two nations in approximately 28 years. Although the total financial contribution from the US side was not disclosed, both officials affirmed that Tokyo and Washington remain prepared to coordinate further interventions.

Bessent defended the move in an August 27 letter sent to Democratic lawmakers, arguing that currency stability in Tokyo is directly tied to the health of US financial markets.

Japan is a major holder of US Treasuries.

Bessent explained that extreme volatility in the Japanese currency could ultimately feed through into higher US interest rates. Katayama echoed that cooperation at a press conference in Tokyo, pointing out that a September 2025 joint statement by Japanese and US finance ministers supporting currency intervention remains very strong.

Exchange rate volatility and timeline

The decision to intervene followed a prolonged decline that pushed the dollar toward 164 yen in late July, its highest level in 39 years and eight months. On the night of July 30, Japanese authorities began selling dollars, causing the US currency to drop by approximately 5 yen and slip below 158 yen. The exchange rate climbed back above 160 yen the following day before dropping below 158 yen again, and the dollar fell further on August 3 as joint operations took effect.

Return above key 160 threshold

Despite the scale of spending, the yen slipped again on Friday, August 28, dropping as much as 0.4% to 160.01 yen per dollar. The slide erased more than half of the recovery achieved during the July and August operations. Market demand for the dollar increased following public commitments from Federal Reserve Chairman Kevin Warsh. The exchange rate was shaped by widening interest rate differentials between the United States and Japan, higher import costs linked to conflict in the Middle East, and caution surrounding the expansionary fiscal agenda of Japanese Prime Minister Sanae Takaichi.