Japan and US coordinate to counter yen bears in 'Reiwa Plaza Accord'

Key facts

• Japan and the U.S. intervened to buy yen on August 1, 2026, the first coordinated action since June 1998.
• The intervention pushed the dollar-yen exchange rate from a 40-year low of around 163.73 to the 155 yen level.
• Japanese Finance Minister Satsuki Katayama confirmed the coordinated effort with U.S. Treasury Secretary Scott Bessent.
• Japan had previously spent an estimated 10 trillion yen on unilateral interventions that failed to halt yen depreciation.

Japan and the United States have jointly intervened in foreign exchange markets to support the yen, a move not seen in 28 years. The coordinated action on August 1, 2026, aimed to curb the yen's sharp depreciation, which had pushed it to a 40-year low against the dollar, trading around 163.73 yen per dollar just before the intervention. Following the intervention, the yen surged to the 155 level against the dollar.

Japanese Finance Minister Satsuki Katayama officially confirmed the coordinated effort with U.S. Treasury Secretary Scott Bessent, who stated the action counteracted 'chaotic yen depreciation' and indicated a willingness for future joint interventions. This marks a significant escalation after Japan's previous unilateral interventions, estimated to have cost 10 trillion yen between April 30 and May 6, 2026, failed to stem the yen's decline.

The market has seen speculation of a 'Reiwa Plaza Accord,' referencing the 1985 agreement that saw global powers coordinate to devalue the U.S. dollar. However, some analysts remain skeptical, viewing intervention as symptomatic treatment that may not sustainably strengthen the yen, with some predicting a return to 160 yen by year-end.

Prime Minister Sanae Takaichi has also issued strong warnings against currency speculation. Reports of the Federal Reserve Bank of New York conducting a 'rate check' with major banks, a move historically seen as a precursor to intervention, further fueled market sentiment. The intervention led to a sharp rally in the yen, with USD/JPY plunging over 1% and Japanese Government Bond yields cooling.