The US and Japan coordinated to buy yen and stabilize the currency after it weakened significantly last week.
Treasury Secretary Scott Bessent called the yen "very undervalued." Analysts believe the intervention was driven by concern that continued yen weakness could push already-elevated US bond yields higher and destabilize broader markets.
What happened
The US and Japanese governments coordinated to stabilize the yen after the currency fell sharply last week. US Treasury Secretary Scott Bessent said Friday the yen is "very undervalued."
Why it matters
The yen has weakened for months due to Prime Minister Sanae Takaichi's expansionary fiscal policy, including increased defense spending. Analysts say the White House feared a yen selloff could push US bond yields—already elevated—even higher, risking wider economic instability.
What to watch
This marks a historic intervention for currency stabilization. The move parallels US support for Argentina's peso last fall, timed to back President Javier Milei's economic liberalization efforts.
The US and Japanese governments took coordinated action last week to stabilize the yen after the currency experienced a sharp decline. US Treasury Secretary Scott Bessent characterized the situation on Friday, stating the yen is "very undervalued."
Economists trace the yen's months-long weakness to Prime Minister Sanae Takaichi's expansionary fiscal policy, which includes a push to boost defense spending. The currency's decline has been persistent, prompting the intervention. According to analysts cited in the article, the White House was concerned that continued yen weakness could push US bond yields—which remain elevated—even higher, creating broader economic instability.
The intervention draws a parallel to US actions on behalf of Argentina's peso in the fall. That earlier move was timed to support President Javier Milei's coalition. The Reason Foundation characterized it as a "calculated wager" that Buenos Aires would "continue advancing economic liberalization." The yen intervention appears to follow a similar logic: stabilizing a currency in support of allied policy direction while simultaneously protecting US financial interests.
The coordinated intervention reflects a historic moment in currency markets, with the US and Japan acting jointly to arrest the yen's decline. The body attributes the yen's months-long weakness to domestic Japanese policy—specifically Prime Minister Takaichi's expansionary fiscal approach and defense spending increases—rather than to global factors. What distinguishes this moment is the White House's apparent concern that further yen weakness could destabilize US financial conditions by pushing already-elevated bond yields even higher, creating knock-on effects across global markets.
The article frames this intervention as analogous to US support for Argentina's peso last fall, suggesting a pattern where Washington coordinates currency support to reinforce allied governments' economic agendas. In Argentina's case, the Reason Foundation characterized the move as a "calculated wager" that Buenos Aires would continue economic liberalization; by extension, the yen support signals confidence in Takaichi's fiscal direction while also protecting US financial stability.
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