Key Points
- 01U.S. Treasury bought yen in first joint move with Tokyo in years
- 02New York Fed sold euros for yen via major banks; size undisclosed
- 03Treasury told banks to be ready for possible further yen action
- 04White House weighed new Iran strikes as Tehran warned of retaliation
U.S. steps into yen market alongside Japan
The U.S. Treasury bought Japanese yen on Friday to support the currency, marking its first yen-buying intervention with Japanese authorities in more than a decade. The move followed a sharp weakening of the yen, with the dollar having risen in recent weeks to nearly 164 yen, its highest level since 1986.
The Federal Reserve Bank of New York executed the operation by selling euros for yen on behalf of the Treasury through major dealers including Goldman Sachs (GS) and Morgan Stanley (MS). Reports did not indicate the amount of yen purchased, leaving the scale of the intervention unclear even as its symbolic weight was evident.
Earlier on Friday, the Treasury had informed a number of banks that it might intervene in the yen market and instructed them to stand ready for possible future action. A photograph of Treasury Secretary Scott Bessent’s notepad taken during a Camp David cabinet meeting showed a to-do list that included the line “Buy Japanese Yen (JPY) $5-10 bil,” underscoring that officials were actively considering sizeable support.
Market impact and Japan’s parallel actions
News of potential and actual intervention contributed to a rebound in the yen over the course of the U.S. trading session. LSEG data showed the dollar falling to about 157.6 yen just before 5 p.m. EDT, compared with around 158.9 yen at about 4:14 p.m. EDT, as markets responded to official action and signaling.
Japan had already been active in the market. Central bank data indicated that Japanese authorities may have sold as much as $58.97 billion to buy yen on Thursday. Tokyo was also reported to have intervened again during New York trading hours on Friday, suggesting coordinated or at least parallel efforts to stabilize the currency.
The combination of Japanese intervention and reported U.S. participation highlighted policymakers’ concern about the speed and scale of the yen’s decline. The recent surge of the dollar against the yen to levels not seen since 1986 had raised the risk of disorderly moves and heightened scrutiny from global investors.
Iran tensions add to global uncertainty
While currency authorities acted in the foreign-exchange market, geopolitical risks also loomed. The White House signaled that President Trump was weighing new strikes on Iran, following what U.S. officials earlier in the week described as a heavy wave of strikes in the region.
Despite this signaling, there were no announcements of new U.S. strikes overnight, and U.S. Central Command did not report launching strikes on Thursday or Friday. This left markets watching for potential escalation without confirmation of fresh military action.
Iranian officials and state-affiliated outlets warned that Tehran would respond decisively to any attack. Iran’s foreign minister cautioned the United States against what he described as adventurous action and said Tehran would respond decisively to any attack, adding a layer of geopolitical risk to an already volatile global backdrop.
Key Takeaways
- 01U.S. and Japanese authorities moved in tandem to counter rapid yen weakness, signaling a low tolerance for further sharp depreciation.
- 02The lack of disclosed size for the U.S. yen purchases leaves uncertainty about how sustained or large future interventions might be.
- 03Japan’s sizable recent yen-buying and reported repeated actions in New York hours show it remains the primary actor, with U.S. support adding weight.
- 04Simultaneous currency intervention and rising Iran tensions create a complex environment in which markets must track both policy moves and security risks.