US intervenes in currency markets: Trump aims to save Japan from economic collapse
The US administration is purchasing yen in the amount of 5–10 billion dollars as the Japanese currency hits 40-year lows. Beyond supporting an ally, the intervention offers a direct benefit to Washington: it may reduce Japan's sale of US bonds, thereby lowering the cost of servicing American debt.
The United States has decided to intervene to raise the value of the Japanese yen. This move, coordinated with the Japanese government, is intended to halt the decline of the currency, which is approaching 40-year lows. The accelerating weakening of the yen is particularly burdensome for the Japanese economy, as the country depends heavily on energy and food imports, and the depreciation of the local currency makes these goods significantly more expensive for businesses and consumers.
Since 2022, Japan has invested billions of dollars in attempts to curb the currency's decline, but without success. Among the primary factors driving the yen's value down are massive sell-offs by investors, disruptions to energy imports from the Middle East following the war in Iran, zero interest rates, and a public debt exceeding 200% of GDP—the highest in the G20.
According to a report in The Guardian, the US Department of the Treasury is set to purchase yen worth 5–10 billion dollars. US Secretary of the Treasury Scott Bessent was photographed during a meeting holding a notepad with an inscription indicating a target for purchasing yen in that amount. Later, President Donald Trump confirmed that the Treasury had indeed purchased large quantities of the currency:
"Japan has been very good to us, except of course for Pearl Harbor," he said.
According to Donald Trump, the intervention "will benefit the global economy." However, analysts suggest that Washington has its own strategic interest: the move may encourage Japan to sell fewer US bonds, which helps stabilize yields and lowers the financing costs of the US debt.
The US intervention comes amid growing political pressure on Japanese Prime Minister Sanae Takaichi and marks the first such action by the US in three decades. Sanae Takaichi has seen her poll numbers decline due to rising import costs and oil prices. In April, she announced a temporary reduction in the consumption tax on food and is simultaneously promoting a government investment plan worth hundreds of billions of dollars to accelerate growth.
This is not the first time the Donald Trump administration has attempted to save an ally's currency. In October, the Treasury purchased billions of dollars in Argentine pesos to support Argentina's economy ahead of critical elections for President Javier Milei. Scott Bessent clarified at the time that the intervention was intended to ensure the success of Argentina's "reform plan"—an austerity program that included wage freezes and cuts to public spending.
