How a US-Japan pact to hit yen speculators came together

For Japan, a weak yen has fanned import prices, creating cost-of-living headaches for successive governments.

TOKYO – A joint US-Japanese effort to fight off speculative bets against a battered yen last week followed months of preparation by the two nations and a rare and public alignment of interests in Washington and Tokyo over exchange rates.

While unilateral efforts by the Japanese authorities to stop sharp yen selling in the past have failed to provide a firm floor for the currency, US Treasury Secretary Scott Bessent’s verbal support for a stronger yen has given bureaucrats in Tokyo a new tool in their fight in 2026.

For Japan, a weak yen has fanned import prices, creating cost-of-living headaches for successive governments, including Prime Minister Sanae Takaichi’s.

For the US, a weak yen blunts the trade advantage from President Donald Trump’s flagship tariffs, while a related sell-off in Japanese government bonds could spill over to US Treasury yields.

The shared currency anxiety has not only forged increasingly cosy bilateral conversations about exchange rates, historically a diplomatically thorny topic for the two economic powers, but also added new pressure for the Bank of Japan (BOJ) to persist with rate hikes.

Japan’s Finance Minister Satsuki Katayama said she and US Treasury Secretary Scott Bessent have held talks about 10 times.

US participation in yen-buying intervention was considered as early as January, when the New York Federal Reserve made rare rate checks to help Tokyo combat yen declines, said a Japanese government official with knowledge of the preparations.

“Including online meetings, we’ve held talks about 10 times for discussions that included exchange rates,” Japanese Finance Minister Satsuki Katayama said on Aug 3, on how frequently she spoke with Bessent.

“When he visited Japan in May, we talked 3½ hours, including over dinner,” Katayama said upon announcing Japan’s joint currency intervention with the US.

The May talks followed Japan’s huge yen-buying intervention between late April and early May, which failed to reverse the yen’s downtrend.

In a sign negotiations were intensifying, Katayama said after the May meeting that the two have been “coordinating very closely on foreign exchange and will continue to do so.”