Global Markets Analyst 10 Questions on Coordinated Yen Intervention

Economics Research 4 August 2026 | 2:38PM BST

10 Questions on Coordinated Yen Intervention

n As we recently discussed in both our FX Trader and Rates Trader publications, the Michael Cahill | coordinated FX intervention represented a strong policy step towards stabilizing Goldman Sachs International the Yen. That said, this intervention will likely only be a temporary, albeit William Marshall significant, reprieve if it is not reinforced by a material change in the global | growth outlook or domestic policy mix. Goldman Sachs & Co. LLC

Karen Reichgott Fishman n We address a number of common questions on the market dynamics around | Japan and US intervention. In general, we think investors are overly concerned Goldman Sachs & Co. LLC

about policy constraints and disruptions to Treasury market functioning. We Isabella Rosenberg | think there are interesting signals in the Treasury’s decision to transact in Goldman Sachs & Co. LLC EUR/JPY and encouraging the use of the Fed’s FIMA facility—these two policies Lexi Kanter together represent an effort to maximize the effects on the Yen and minimize the | effects on US Treasuries and the US Dollar. Goldman Sachs & Co. LLC

n We are skeptical that Treasury’s involvement is a harbinger of more significant domestic policy changes in Japan. We think it is much more likely that Treasury sees this as a low-cost option to work with Japanese officials to help minimize the potential for unwelcome volatility in the US Treasury market, rather than taking a strong view on the Yen.

10 Questions on Coordinated Yen Intervention

Q1: What are your main market takeaways?

As we discussed in both our FX Trader and Rates Trader publications on Friday (July 31), the coordinated FX intervention represented a strong policy step towards stabilizing the Yen. That said, this intervention will likely only be a temporary, albeit sizeable, reprieve if it is not reinforced by a material change in the global growth outlook or domestic policy mix (Exhibit 1). We believe the Yen’s relatively muted response (when scaling for the size and scope of policy action, including the US’s involvement) demonstrates that recent currency weakness was in line with macro and market fundamentals, and the rates market continues to embed some risks of being behind the curve (Exhibit 2). Our economists believe that this intervention step increases the BoJ’s degrees of freedom, but still see a low probability that the BoJ will step up the pace of hikes. It is likely at least partly dependent on how effective this new phase of currency management turns out to be. This outlook for monetary

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Goldman Sachs Global Markets Analyst

policy, together with the intervention, recent fiscal announcements and GPIF/NISA plans, suggests little appetite to address the key macro risks that have contributed to JGB volatility and a weak Yen.

Exhibit 1: The initial market reaction in USD/JPY was Exhibit 2: The relatively muted response in USD/JPY, when similar to that in April, but subsequent intervention and considering the intervention’s size and coordination with policy coordination has led to a larger effect the US, reinforces our view that the fundamental backdrop for the Yen remains negative

USD/JPY USD/JPY Price Action USD/JPY Basis points Basis points 161 164 Spot Move in USD/JPY Over 2 Weeks Following the First Day of Intervention Scaled by Total Size in $bn 160 30 April - 5 May (Left) 163 0 0

159 30 July - 4 August (Right) London Time (GMT -Oct-22 29-Apr-24 11-Jul-24 30-Apr-26 30-Jul-26 0:00 10:00 20:00 6:00 16:00 1:00 11:00 21:00 7:00 17:00 First Day of Intervention

Source: Goldman Sachs FICC and Equities, Goldman Sachs Global Investment For the latest round of intervention, we use the change in spot from July 30 Research through August 4 (vs. 2 weeks for the others).

Source: Bloomberg, BoJ, Goldman Sachs Global Investment Research

But when considering the size and scope of the recent policy actions, we have to make room for the possibility that policymakers might…