Japan and the US carried out joint action in the currency market to stop the yen’s fall to its lowest levels in the past 40 years, two sources in the Japanese government told Reuters.

Japan’s Finance Minister Satsuki Katayama is expected to announce this on Monday and emphasize the two countries’ readiness to counter excessive weakening of the Japanese currency. According to the sources, the operation is ongoing.

This is the first joint currency intervention by Tokyo and Washington since 2011. According to market sources, Japanese and US authorities began buying yen after the currency’s exchange rate approached its weakest levels against the dollar since 1986.

Japanese authorities reportedly conducted the first operation on Thursday during trading in New York. According to the Bank of Japan, the volume of dollar sales to support the yen may have reached up to $58.97 billion.

The intervention came shortly before the Bank of Japan’s decision to maintain its current monetary policy while signaling a possible interest rate hike in the near future. One of the main reasons for the yen’s decline remains the interest rate gap between Japan and the US: the Federal Reserve is pursuing a tighter policy, which supports the dollar.

After Bank of Japan Governor Kazuo Ueda’s remarks on Friday, the yen strengthened sharply, which market participants also linked to possible new intervention by Tokyo.

Japan’s top currency diplomat, Atsushi Mimura, said after the surge in the exchange rate that the Finance Ministry and the Bank of Japan would act in close coordination.

US authorities had also previously signaled possible readiness for further action.

According to Reuters, the US Treasury informed a number of banks about the possibility of market intervention and asked them to be prepared for future operations.

An additional signal was a note by US Treasury Secretary Scott Bessent at a government meeting, where, according to a Reuters photograph, one of the items read: “Buy Japanese yen (JPY) worth $5–10 billion.” Bessent had previously said that the yen “appears to be significantly undervalued.”

At the same time, Japan is trying to reduce risks associated with rising yields on US government bonds. Analysts note that further sales by Tokyo of US Treasuries to finance currency interventions could put pressure on the US government debt market and lead to higher yields.

Japan’s Finance Ministry also, for the first time in a long while, published a message in English on social media platform X, stating that it has a “broad set of tools” to support market liquidity, including access to Federal Reserve mechanisms for providing dollar liquidity.

Experts believe that coordination between Tokyo and Washington is linked not only to the yen’s exchange rate, but also to concerns over rising inflation and pressure on both countries’ central banks.

“Both the US and Japan face the risk of accelerating inflation and of their central banks falling behind the situation. This cooperation makes sense,” said former Bank of Japan official Nobuyasu Atago.

Japanese authorities also expressed concern about the state of the domestic government bond market. Japan’s Economy Minister Minoru Kiuchi said the government would step up engagement with markets to maintain confidence in the resilience of Japan’s financial system.