US and Japan Prop Up Yen in Rare Joint Move

The US and Japan jointly intervened in currency markets to support the yen, with Washington lending dollars to Tokyo against US Treasury collateral — the first such coordinated action since 2011. The move shields both countries: Japan keeps buying yen without draining reserves, while the US avoids a massive Treasury sell-off that could spike global interest rates.

What exactly happened between the US and Japan?

The United States and Japan carried out their first coordinated currency intervention since the March 2011 earthquake and tsunami. Washington effectively lent dollars to Tokyo — using US Treasury bonds held by Japan as collateral — allowing the Bank of Japan to buy yen without flooding the Treasury market with bond sales.

How does the FIMA repo line work?

Through the Federal Reserve's Foreign and International Monetary Authorities (FIMA) repo facility, foreign central banks can temporarily sell US Treasuries to the Fed under a repurchase agreement and receive dollars in return. Japan's Finance Minister Satsuki Katayama confirmed in an official statement that Tokyo plans to use this line going forward. The facility carries a limit of $60 billion.

Why does this matter for the yen — and for Treasury markets?

When speculators sense that Japanese authorities are running low on dollars to sell, they tend to accelerate yen sell-offs. The FIMA line removes that vulnerability. Meanwhile, the US Treasury avoids the nightmare scenario of Japan dumping $1.3 trillion in reserves onto bond markets — a move that could spike yields dramatically, as happened in early 2020 when the 10-year Treasury yield jumped nearly one percentage point in two weeks.

What did officials say?

US Treasury Secretary Scott Bessent described the FIMA repo facility as an "important safeguard" and said the US would encourage expanding its limit in the coming months. President Donald Trump characterized the intervention as a "sign of friendship," though analysts see it as a deeply pragmatic financial arrangement that serves both sides.

Where did the yen trade after the intervention?

The yen strengthened to around 155.2 per dollar late Sunday before settling in a range of 156–157 per dollar on Monday, suggesting markets are still testing the two governments' commitment to cooperation.

Key Facts:

First US-Japan joint currency intervention since March 2011
Mechanism: FIMA repo line — Japan sells Treasuries to the Fed temporarily, receives dollars
FIMA facility cap: $60 billion
Yen traded at 155.2–157 per dollar after the move
Japan holds $1.3 trillion in foreign reserves, mostly tied up in Treasuries
FIMA system was created in March 2020 during the COVID-19 dollar shortage