Washington and Tokyo aligned on currency policy to curb yen declines, marking a shift in bilateral exchange rate diplomacy.
The US and Japan collaborated last week to deter speculative bets against the yen, following months of diplomatic and technical preparations. The effort reflects a rare alignment of interests, with Japan seeking to stabilize import costs and the US aiming to mitigate trade imbalances and bond market spillovers.
Previous unilateral yen interventions by Japan failed to sustain currency support, but US Treasury Secretary Scott Bessent’s verbal backing this year provided Tokyo with additional leverage. Discussions included potential joint yen-buying operations, with the New York Federal Reserve conducting rare rate checks in January to assist Japan’s efforts.
The coordination signals deeper bilateral engagement on exchange rates, historically a sensitive topic, while increasing pressure on the Bank of Japan to continue tightening monetary policy.