Japan Economic Flash First Coordinated US Japan Intervention in 15 Years Sends a Strong Signal Against Yen Depreciation

Economics Research 3 August 2026 | 8:13PM JST

Japan Economic Flash: First Coordinated US-Japan Intervention in 15 Years Sends a Strong Signal Against Yen Depreciation

n US and Japanese authorities conducted a coordinated intervention in the Yuriko Tanaka | USD/JPY market for the first time in 15 years. We think the US decision to step Goldman Sachs Japan Co., Ltd. into a coordinated intervention to curb the yen depreciation, reaffirms the strong Akira Otani interest from both Japan and the US side to support the Yen. | Goldman Sachs Japan Co., Ltd.

n Compared to a solo intervention by a country aimed at defending its currency (or Tomohiro Ota | curbing currency appreciation), a coordinated intervention sends a stronger Goldman Sachs Japan Co., Ltd. message to the foreign exchange market. However, there are instances where even coordinated interventions have limited effects, if there are no changes in the underlying fundamentals driving the exchange rate trend. n In addition, the joint statement noted plans to utilize the US Federal Reserve’s Foreign and International Monetary Authorities (FIMA) Repo Facility. US Treasuries from Japan’s foreign currency reserves were sold for USD-selling/JPY-buying interventions, but utilizing this repo facility will make it possible to borrow USD for intervention funds from the Fed without the Japanese authorities selling US Treasuries. n The purpose of the FIMA Repo Facility is to provide alternative temporary source of US dollars, as a backstop of dollar liquidity in times of crisis. However, the fact that US authorities approved the use of this facility suggests the US side sees potential risk that fx intervention could push up US Treasury yields, as it reached to a two-year high recently. n The latest coordinated US-Japan intervention will likely serve as a factor to alleviate pressure from the Japanese government on the BOJ’s monetary policy. The BOJ’s stance is to proceed flexibly with rate hikes in response to the risk of underlying inflation exceeding 2%. We think the stepped up stance on FX intervention by the government will increase the BOJ’s degree of freedom in policy management. However, whether the BOJ uses the degree of freedom is a separate issue. For the BOJ to accelerate the pace of rate hikes, it needs to judge that the risk of underlying inflation exceeding 2% is becoming a reality, through making an upward revision to its inflation outlook. At this stage, we don’t judge this possibility to be high, and we continue to expect the BOJ to hike rates at intervals of about six months, with the next hike occurring in January next year.

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Goldman Sachs Japan Economic Flash

First Coordinated US-Japan Intervention in 15 Years Sends a Strong Signal Against Yen Depreciation

In the foreign exchange market, JPY-buying interventions were conducted on July 30 and 31. The interventions took place as the USD/JPY rate approached ¥164/USD, its weakest level in 40 years. Although there is no official statement regarding the July 30 intervention, the BOJ’s funds supply/demand data suggests an intervention in the order of ¥7-¥8 tn was conducted. Regarding the July 31 intervention, a statement was released announcing that the US and Japan conducted a coordinated intervention. Based on the BOJ’s outlook for funds supply/demand, we estimate the intervention amount to be around the ¥4.5-¥5.5 trillion scale. Given that the intervention amount in April-May was ¥11.7 tn, the intervention amount over these two days (July 30-31) was slightly north of the May intervention (not including possible intervention on August 3. Methodology of estimating the yen fx intervention size from the BOJ funds supply / demand can be found here).

Exhibit 1: The USD/JPY Rate Has Appreciated Significantly Since July 30 USD/JPY Movements (5 Minute Tick)

155 155 5:00 13:00 21:00 5:00 13:00 21:00 5:00 11:10 7/30 7/31 8/1 8/3

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