Japan and the US have confirmed they joined forces to prop up the yen after the currency fell to a 40-year low.
The Japanese government said on Monday it had taken action to counteract “excessive volatility and disorderly movements in recent months” after the US treasury bought the currency for the first time in 15 years.
The yen surged more than 1pc to 155.20 per dollar, its strongest since early May, after the rare joint intervention. The yen had previously sunk to its lowest price against the US dollar since 1986.
It is the first time the US has bought up the yen since 2011 following the devastating earthquake in eastern Japan.
Donald Trump said on Sunday that the US was helping Japan support its currency as a sign of friendship and to help the world economy.
Satsuki Katayama, Japan’s finance minister, said: “We will not hesitate conducting further coordinated intervention.”
The yen has been weakening because of a gap between Japanese and US interest rates, high oil prices and concerns about the spending plans of Sanae Takaichi, the prime minister.
Scott Bessent, the American treasury secretary, said the US would “strongly support Japan’s decisive market and monetary steps to correct the substantial undervaluation of the yen”.
He said: “The Takaichi government is moving into an exciting new phase of Abenomics, as nearly 15 years of powerful stimulus have created durable, robust underlying economic dynamics.”
Mr Bessent had earlier been photographed with a “to do list” that said “Buy Japanese Yen (JPY) $5-10 bil”.
In a post on X on Friday, Mr Bessent praised Ms Takaichi and Kazuo Ueda, the governor of the Bank of Japan, for their “strong commitment to monetary and financial stability”.
The total value of the US and Japanese intervention last week was estimated at around 8.45tn yen (£40bn).
Japan’s currency has slumped to record lows this year as the country’s central bank has suppressed interest rates, meaning investors are able to make better returns on other currencies.
The value of the yen sank even further after the Bank of Japan held its benchmark interest rate at 1pc last week, as the US Federal Reserve also kept its own borrowing costs stable at 3.5pc.
Reports of the US intervention on Friday helped lift the value of the yen to a three-month high. It also saw the value of the US dollar fall against Japan’s currency, from 164 yen to the dollar on Tuesday to 157 yen by the end of last week.
The US also bolstered Japan’s currency in 1998 to help strengthen the country’s economy when the yen fell to eight-year lows.
