Market history · Currencies ·
The US and Japan step in to support the yen
The Japanese yen weakened through July 2026, reaching 163.99 per dollar, its weakest level since 1986, as the gap between US and Japanese interest rates encouraged carry trades and investors worried about Japan's heavy public debt. The Bank of Japan had raised its policy rate to 1.0% in June.
On 31 July 2026 Japan and the United States jointly intervened to buy yen, which was reported as their first joint move in the currency market in years. The yen strengthened to 157.40 that day and briefly touched 155.23 the following Monday, when both governments said they were ready to act again. Japan's finance minister said the action countered excessive volatility and disorderly movements.
Within weeks the yen had weakened again despite the intervention, and Japanese government bond yields kept climbing. The episode echoed the carry-trade unwind of August 2024, when a rising yen forced investors to close positions funded in the currency.
The takeaway
Currency intervention can slow a move, but it rarely overrides interest-rate differences for long.
Sources
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