Daijiworld Media Network – Tokyo
Tokyo, Aug 2: Japan and the United States are set to announce joint action in the currency market to support the yen after it fell to its weakest level against the dollar in nearly 40 years, Japanese government officials told Reuters.
Japanese Finance Minister Satsuki Katayama is expected to announce the move on Monday and highlight the two countries' commitment to preventing excessive depreciation of the Japanese currency, sources familiar with the matter said.
One official confirmed that the announcement would involve "joint action", adding that the operation was still underway.
The Japanese Ministry of Finance and the US Treasury Department have not immediately commented on the reports.
The expected announcement follows reports of yen-buying operations by Japanese and US authorities, marking the first coordinated intervention since 2011.
Market sources said Japan purchased yen against the dollar during New York trading hours on Thursday, with Bank of Japan data suggesting that Tokyo may have sold up to $58.97 billion to support the currency.
The intervention came shortly before the Bank of Japan (BOJ) decided to maintain its monetary policy stance while signalling a strong possibility of future interest rate hikes.
A widening interest rate gap between Japan and the United States has been a major factor behind the yen's decline, as higher US rates have strengthened the dollar.
The yen surged shortly after BOJ Governor Kazuo Ueda's press conference on Friday, with market participants suspecting another round of intervention by Japanese authorities.
Japan's top currency diplomat Atsushi Mimura indicated that the Ministry of Finance and the central bank were working closely to address the weak yen.
"Going forward, as the official responsible for currency policy, I would like to respond in close coordination with monetary policy," Mimura said.
The US Treasury reportedly informed several banks that it may intervene in the yen market and advised them to prepare for possible future action.
Treasury Secretary Scott Bessent had earlier described the yen as "very undervalued". A Reuters photograph from a cabinet meeting showed a notepad with a reference to "Buy Japanese Yen (JPY) $5-10 bil".
The Japanese Finance Ministry also made a rare English-language post on X, stating that it had a broad range of tools to address market liquidity needs, including access to the US Federal Reserve's repurchase facility for temporary dollar liquidity.
Analysts said cooperation between Tokyo and Washington may also be linked to concerns over rising US Treasury yields. Continued yen weakness could trigger a sell-off in Japanese government bonds and put additional pressure on global markets.
Former Bank of Japan official Nobuyasu Atago said both countries face risks from inflation remaining high and central banks falling behind in policy responses.
"They see merits in cooperating," he said.
Meanwhile, Japan's Economy Minister Minoru Kiuchi said the government would strengthen communication with markets to maintain confidence in the country's fiscal stability amid concerns over rising government bond yields.