US Treasury’s Historic Yen Intervention: First in a Decade Boosts Battered Japanese Currency

In a significant move that sent ripples through global currency markets, the U.S. Treasury has reportedly purchased yen to bolster the struggling Japanese currency. This marks Washington's first direct yen-buying intervention with Tokyo in over a decade, occurring as the yen hovers near its lowest levels in 40 years, according to a report by the Financial Times.

Sources familiar with the matter told the FT that the Federal Reserve Bank of New York executed the yen purchases on behalf of the Treasury, selling euros through major financial institutions like Goldman Sachs and Morgan Stanley. While the specific amounts of yen transacted were not disclosed in the report, the intervention signals a strong commitment from the U.S. to stabilize the Japanese currency.

Earlier on Friday, the Treasury had alerted several banks about a potential intervention in the yen market, advising them to "stand ready for future action," a Reuters source confirmed. Further insight into Washington's intentions emerged from a Reuters photograph of Treasury Secretary Scott Bessent's notepad during a cabinet meeting at Camp David. The note clearly read: "To Do," followed by "Buy Japanese Yen (JPY) $5-10 bil." This photographic evidence, dated July 31, 2026, provided a tangible glimpse into the strategic planning behind the intervention.

Neither the Treasury, the New York Fed, nor Morgan Stanley immediately commented on the FT report or the Bessent notepad photo outside of regular business hours, while Goldman Sachs explicitly declined to comment.

Looking ahead, Kyodo News reported on Saturday that Japan and the United States are expected to unveil a joint policy as early as next week aimed at addressing the yen's sustained weakness. This announcement is anticipated to act as a deterrent against speculative trading that has pressured the Japanese currency, ultimately seeking to restore market stability.

The last time the U.S. directly intervened to support the yen was in 2011, when it coordinated with other Group of Seven (G7) nations to stabilize markets in the aftermath of Japan's devastating earthquake and tsunami.

News of the potential U.S. Treasury intervention had an immediate positive impact on the yen. LSEG data showed a notable jump during late afternoon trading, with the dollar dropping to approximately 157.6 yen just before 5 p.m. EDT (2100 GMT) from around 158.9 yen earlier at 4:14 p.m. This move comes after the U.S. currency had recently climbed to nearly 164 yen, its highest level against the yen since 1986.

Separate reports indicated Japan's own aggressive efforts to shore up its currency. Central bank data suggested Japan may have sold as much as $58.97 billion to buy yen on Thursday, with the Nikkei reporting further intervention by Tokyo in New York trading hours on Friday.

In an apparent effort to calm market anxieties about the extent of Japan's capacity for large-scale intervention, the Finance Ministry posted on X (formerly Twitter) that Japan's monetary authorities possess "a broad range of tools to address market liquidity needs." The ministry affirmed, "We remain prepared to use available tools as necessary to support orderly market functioning," specifically mentioning potential access to the Federal Reserve's standing Foreign and International Monetary Authorities (FIMA) Repo Facility. Established in 2020 to stabilize markets during the Covid-19 pandemic, the FIMA repo facility offers Japan a crucial mechanism to raise dollar liquidity without resorting to outright sales of U.S. Treasuries, thereby potentially easing the funding pressures associated with currency intervention.