The U.S. Treasury took the rare step of intervening in the currency market on Friday to support the Japanese yen, marking its first coordinated action with Japan in over ten years. This move was prompted by the yen’s slide to levels near 40-year lows against the dollar. The intervention was executed through the Federal Reserve Bank of New York, which sold euros to buy yen on behalf of the Treasury, utilizing Goldman Sachs and Morgan Stanley as intermediaries. Although the exact amounts were not disclosed, a notepad belonging to Treasury Secretary Scott Bessent revealed plans to purchase between $5 billion and $10 billion worth of yen.

Japan had already been actively defending its currency, reportedly selling close to $59 billion to purchase yen on Thursday, with additional interventions continuing on Friday during New York trading hours. Tokyo aims to thwart speculative pressures that have been destabilizing the yen, a goal it shares with Washington amid concerns over market volatility. In response to market concerns regarding its capacity for intervention, Japan’s Finance Ministry emphasized its access to a broad toolkit to maintain market stability, including the Federal Reserve’s Foreign and International Monetary Authorities Repo Facility, which can furnish dollar liquidity without requiring outright sales of U.S. Treasury securities.

The coordinated intervention follows increasing pressure on the yen, with the dollar having recently reached a 40-year peak of nearly 164 yen before the intervention news caused the dollar to retreat to about 157.6 yen by late trading on Friday. The U.S. last engaged directly in yen market operations in 2011 alongside other Group of Seven nations, aiming to stabilize markets after the devastating earthquake and tsunami in Japan. The potential unveiling of a policy from both countries as soon as next week underscores their readiness to stabilize currency markets and discourage overly speculative movements.

This joint action highlights heightened collaboration between the U.S. and Japan to stem the yen’s recent decline, which poses risks to financial stability and international trade dynamics. While neither the Treasury nor financial firms involved commented publicly on the intervention, the move signals a clear warning against further speculative bets weakening the yen. Market participants remain attentive to forthcoming policy measures expected to reinforce the yen and ensure orderly functioning of currency markets.