Last week marked the first joint US-Japanese yen-buying intervention since 1998, a significant escalation driven by historical shifts in currency policy. The rare cooperative operation highlights Washington’s traditional reluctance to strengthen the yen, contrasting sharply with decades of past market interventions aimed at preventing excessive appreciation.
Historical Shift Behind the Joint US-Japanese Operation
Last week’s cooperative market maneuver carries substantial historical weight. The operation marks the first time Washington and Tokyo have jointly intervened to buy yen since 1998. Historically, Washington has shown considerable reluctance to participate in efforts strengthening the Japanese currency. That reluctance makes the 2026 decision a notable policy escalation, underscoring the unusual nature of the recent USD/JPY reversal.
Shifting Objectives from Dollar Buying to Yen Support
Currency intervention strategies by Japanese authorities have evolved dramatically across past economic cycles. Between 2003 and early 2004, the primary policy objective ran in the opposite direction. Authorities mounted a massive dollar-buying and yen-selling campaign, spending roughly ¥35 trillion to prevent excessive yen appreciation and safeguard the nation’s exporters.
Past campaigns demonstrate a consistent operational rule: policymakers do not target rigid exchange-rate levels. Instead, intervention targets moves deemed excessive or disorderly by authorities.
Safe-Haven Surges and the 2010 to 2011 Interventions
The aftermath of the global financial crisis triggered a new phase for foreign exchange markets. As the global economy struggled with lingering fallout, the yen attracted intense safe-haven demand and appreciated sharply. Japan stepped into the market in September 2010 for its first intervention in six years, following a drop in USD/JPY to around 82.87.
Market pressure intensified further following the devastating March 2011 earthquake and tsunami. Surging safe-haven demand and repatriation flows drove a dramatic currency surge, prompting Japan to engage in coordinated intervention alongside other major economies.
A Decade of Restraint Ended by 2022 Market Pressures
Following the coordinated actions of the post-earthquake era, Japanese authorities largely stayed out of currency markets for more than a decade. That prolonged period of restraint officially ended in 2022, paving the way for the heightened intervention activity culminating in last week’s historic joint operation with Washington.