The United States’ unprecedented decision to join Japan in supporting the yen marks a significant shift in Washington’s approach to foreign exchange markets, according to the Financial Times. Led by US Treasury Secretary Scott Bessent, the coordinated intervention has surprised investors by targeting a steadily weakening currency rather than responding to market disorder, raising expectations that the United States is prepared to intervene more aggressively in financial markets where it believes its strategic interests are at stake.
The United States and Japan carried out their first coordinated intervention to strengthen the Japanese yen in nearly three decades on Friday, a move that has prompted investors and economists to reassess Washington’s role in global currency markets. According to a report by the Financial Times, the operation signals a more activist approach under US Treasury Secretary Scott Bessent, whose intervention in foreign exchange markets represents a notable departure from recent US policy.
Bessent, a former hedge fund trader known for high-profile currency trades while working at George Soros’s investment firm—including bets against the British pound in 1992 and the Japanese yen in 2013—has increasingly embraced direct intervention in financial markets since taking charge of the Treasury under President Donald Trump.
The Financial Times reported that the coordinated operation surprised markets because the yen had been weakening gradually rather than experiencing the kind of disorderly volatility that typically prompts joint intervention by major economies. The operation was also unusual in its execution, with the United States reportedly selling euros to purchase yen instead of using US dollars.
The intervention follows an earlier move by the US Treasury to support Argentina’s peso last year, reinforcing what analysts see as a broader willingness by Washington to use financial markets more actively in pursuit of strategic objectives.
“It’s not for soft power, it’s not for the greater good, so what is the US doing?” one large US bond investor told the Financial Times.
Economists also questioned the decision to support the yen despite underlying monetary policy fundamentals. Japan’s benchmark interest rate remains at 1 per cent, with concerns that the Bank of Japan has not raised rates quickly enough to keep pace with inflation, contributing to continued downward pressure on the currency compared with higher-yielding alternatives.
Bessent drew further attention to the operation when photographers captured handwritten notes during Friday’s Cabinet meeting listing “buy Japanese Yen (JPY) $5-10 bil” among his tasks, publicly revealing the intervention plan.
The coordinated purchases helped lift the yen from nearly ¥164 to the US dollar earlier this month—its weakest level since 1986—to around ¥157. However, traders and analysts cautioned that without broader policy changes, the currency’s gains could prove temporary.
Adam Posen, president of the Peterson Institute and an expert on the Japanese economy, questioned the long-term effectiveness of the intervention.
“The irony of the guy working for Soros and [Stanley] Druckenmiller who broke the Bank of England back in ’92 pretending that you can do FX intervention alone, and lastingly defend a currency, is just amazing,” he told the Financial Times.
Market participants told the newspaper that the intervention has introduced fresh uncertainty into global foreign exchange markets while signalling that Washington is prepared to challenge speculative trades deemed contrary to US interests.
“The US Treasury’s arrival marks a new sheriff in town, warning speculators away from selling the yen,” Chris Turner, Global Head of Markets at ING, told the Financial Times, adding that the move “marks a return to an age of FX activism”.
The US Treasury declined to comment.
The Financial Times reported that both Washington and Tokyo had strong incentives to act. Japanese policymakers have become increasingly concerned that the yen’s depreciation, combined with a sharp sell-off in Japanese government bonds (JGBs), was becoming excessive. At the same time, US officials have reportedly grown concerned that pressure on the yen could contribute to selling of US Treasury securities, increasing borrowing costs for Washington.
Japan remains the largest official foreign holder of US Treasuries, and investors suggested the intervention may have been intended partly to discourage Tokyo from selling those holdings to support its own currency. The Trump administration has also previously expressed concern about the impact of a strong US dollar on American exporters.
“The administration wants a weaker dollar… and they don’t want investors to dump Treasuries to protect their own currencies,” Rushabh Amin, a multi-asset portfolio manager at Allspring Global Investments, told the Financial Times. He added that traders considering selling other currencies against the dollar had become increasingly wary of what he described as a “Bessent bid”.
Although Bessent has previously reaffirmed US support for a “strong dollar policy”, Japan announced on Monday that it plans to utilise a Federal Reserve repurchase facility that analysts believe could allow it to obtain US dollars without selling Treasury securities.
Analysts cited by the Financial Times argued that Washington’s concerns extend beyond currency movements. Foreign central banks reduced their Treasury holdings held at the Federal Reserve to their lowest level since 2012 during the conflict involving Iran, while rising Japanese government bond yields could encourage domestic investors to repatriate funds by selling US debt.
“Bessent’s view is that US bond yields are high because Japanese bond yields are high,” Brij Khurana, a portfolio manager at Wellington, told the newspaper. “So if you support the yen, you bring down yields in Japan and therefore in Treasuries.”
Mark Dowding, Chief Investment Officer for Fixed Income at RBC BlueBay Asset Management, added that the weakening yen “risked undermining” Japanese government bonds and “contributing to higher long-dated yields globally, something the US is very sensitive to”.
Some analysts also suggested that Washington may benefit financially from the intervention. President Trump told reporters that “financial benefit” had been one motivation behind the move.
Kenneth Rogoff, a Harvard professor and former International Monetary Fund chief economist, described the strategy as “quite clever”, comparing it to Bessent’s earlier support for Argentina’s peso. However, he cautioned that lasting success would require more than market intervention.
“Unless the US Treasury is willing to hold massive buckets of yen—and that would be a truly radical break—it’s just a bandage to buy the BOJ a bit more time,” Rogoff told the Financial Times.
Analysts broadly agree that currency intervention alone cannot resolve the structural factors weighing on the yen, including higher oil prices, uncertainty surrounding Japanese government spending and expectations that the Bank of Japan will continue raising interest rates only gradually.
“We all know that the interventions are only buying time, the real heavy lifting is going to fall on the Bank of Japan and on Japan’s fiscal policy,” Masahiko Loo, Senior Fixed Income Strategist at State Street in Tokyo, told the Financial Times.
For Washington, analysts warned that failure of the coordinated intervention could expose both the yen and the US Treasury market to renewed speculative pressure.
“If the intervention doesn’t work, the spillover effects [for long-term Treasuries]… would be significant,” Daleep Singh, Chief Global Economist at PGIM, told the Financial Times. “So strap in.”
