Why Trump stepped in to support Japan's currency
What's the story
Japan and the United States have intervened in a rare joint operation to prop up the yen. The coordinated action comes after the Japanese currency hit its weakest level in nearly four decades. This is also the first such collaboration between Tokyo and Washington since 2011. US President Donald Trump confirmed Washington's involvement, calling it a "signal of friendship" toward one of America's closest allies.
Official acknowledgment
Japan's Finance Ministry confirmed joint intervention
Japan's Finance Ministry confirmed the joint yen-buying intervention with the US Treasury.
The move was aimed at combating "excessive volatility and disorderly movements" in the Japanese currency.
Finance Minister Satsuki Katayama said Tokyo is in close contact with Washington and ready to act again if market conditions warrant such measures.
Market reaction
Dollar falls after Trump's comments
Following Trump's comments, the dollar fell some 0.2% to 157.07 yen, retreating from a near four-decade high of about 164 yen reached late last month.
The coordinated market action comes as Japan's central bank appears to be preparing for further monetary tightening amid the ongoing currency crisis.
Economic impact
Political fallout for Japan
The yen's persistent weakness has been attributed to the interest rate differential between Japan and the US, making dollar-denominated assets more appealing.
This depreciation has pushed up import costs, adding to inflationary pressures and straining household budgets in Japan.
The currency's fall has also posed a political challenge for Prime Minister Sanae Takaichi, whose government has been criticized over the rising cost of living.
Market speculation
Previous interventions and speculations
Japan has intervened several times this year, including in April and May, but those unilateral operations only briefly slowed the yen's decline.
Last week, Bank of Japan data indicated Tokyo may have spent as much as $58.97 billion buying yen in New York trading on Thursday.
There were also reports that US Treasury Secretary Scott Bessent could join yen-buying operations after he was seen with a handwritten note reading "Buy Japanese Yen (JPY) $5-10 bil."