US and Japan Bought Yen Together on August 1, First Joint Intervention in 15 Years

A rare joint move, and an unusual way of doing it

Since the yen collapsed to about 164 per dollar last Thursday, its weakest level since 1986, the US and Japan have moved together to stop the slide. The coordinated intervention took place on August 1, according to Crypto Briefing. Japan's Finance Ministry said Japan and the US were purchasing yen in the open market to prevent further declines and quell volatility, Business Insider reported. The currency surged to around 156 against the dollar, according to Business Insider.

Goldman Sachs analysts called it the first coordinated US-Japan currency intervention in 15 years. The last one came in 2011, after the Fukushima disaster, and it went the opposite direction: Washington sold yen back then to weaken it. This time the goal is to prop the yen up.

Why the euro sale matters more than the headline number

The mechanical detail that has traders talking isn't that the intervention happened. It's how the US funded it. Japan sold US Treasurys, dollar-denominated assets, to raise the cash for its yen purchases, which is standard practice. But the Federal Reserve Bank of New York didn't sell dollars to do its part. It sold euros, according to reporting from the Financial Times cited by both Business Insider and Crypto Briefing.

The trades went through Goldman Sachs and Morgan Stanley as dealer banks, per Crypto Briefing. The euro sale strengthened the yen and pushed the euro down, without the Treasury having to directly weaken the dollar's own standing in global markets.

Goldman Sachs, in a note cited by Business Insider, laid out the logic bluntly: "Further yen weakness or continued USD-selling/JPY-buying interventions by Japanese authorities, is not welcomed from the US perspective." The bank added that a coordinated intervention "sends a stronger message to the foreign exchange market" than either country acting alone.

Treasury Secretary Scott Bessent had signaled beforehand that the purchase could run between $5 billion and $10 billion, though Crypto Briefing reports the final transaction size still hasn't been officially disclosed by either government.

What's driving the yen's collapse

The yen's slide isn't new and it isn't mysterious. The Bank of Japan has kept interest rates extraordinarily low for years while the Federal Reserve and European Central Bank pushed theirs higher. That gap fueled the so-called yen carry trade: investors borrow cheap yen, convert it to dollars or euros, and park it in higher-yielding assets like US stocks and bonds.

That dynamic has quietly funneled enormous sums into American markets for years. It also means any sharp yen rally can force a rapid unwind, as leveraged bets get closed out fast. Crypto Briefing points to the summer of 2024 as a preview: a smaller yen appreciation back then triggered a rapid unwinding of carry trades that hit equities, bonds, and crypto simultaneously, with Bitcoin selling off as yen-funded leveraged positions were forced closed.

Robin Brooks, a senior fellow at the Brookings Institution, offered a different read on US motives, according to Business Insider. Brooks suggested Washington's move could reflect concern about rising US Treasury yields, not just sympathy for Tokyo, and said the sale of euros adds to the market's uncertainty and could prove "counterproductive."