US-Japan pact to hit yen speculators followed months of preparation and rare public alignment of interests

Published Aug 3, 10:26 PM UTC

A joint US-Japanese effort to combat speculative bets against the yen last week followed months of bilateral preparation and a rare public alignment of interests. For Japan, a weak yen has driven up import prices and hurt approval ratings for Prime Minister Sanae Takaichi's government. For the US, a weak yen blunts the trade advantage from President Trump's tariffs and could cause spillover effects on Treasury yields. US Treasury Secretary Scott Bessent's verbal support for a stronger yen gave Tokyo a new tool. Coordination began as early as January when the New York Fed made rare rate checks. Finance Minister Satsuki Katayama and Bessent held multiple talks, including a three-and-a-half-hour meeting in May. Despite Japan's huge yen-buying intervention in April-May and a BOJ rate hike to 1%, the yen continued to slide. Japan's top currency diplomat Atsushi Mimura shifted to behind-the-scenes coordination with US counterparts. The need for action intensified in July as the yen hit four-decade lows. The US Treasury's July 24 currency report echoed Japan's warning against excessive yen volatility.