Dollar Falls to 155.20 Yen After U.S.-Japan Intervention to Support Japanese Currency

Key Facts

The Federal Reserve Bank of New York’s third-quarter report, released on November 12, said the U.S. Treasury bought yen on July 31 as part of a coordinated intervention with Japan to support the Japanese currency. The New York Fed’s trading desk carried out the operation as the Treasury’s fiscal agent, using Treasury funds. The report thus distinguished the Treasury’s yen purchase from Federal Reserve operations conducted on behalf of the System. It said the trade-weighted dollar was "little changed on net" during the quarter, with mixed performance against currencies. The report attributed the yen’s rise to several factors, including the intervention.

The Associated Press reported that the dollar was trading above 163 yen in late July before falling to about 155.20 yen early on August 3, following the official announcement of the intervention. That move shows the dollar’s performance against the yen during the period, while the quarterly report pointed to little net change in the dollar against a broader basket of trade-weighted currencies. The report did not attribute the yen’s rise solely to the intervention, but listed it among several factors. The agency attributed the yen’s weakness to the wide gap between U.S. and Japanese interest rates. It said investors sold yen and bought dollars to benefit from higher returns on dollar-denominated assets.

The yen’s weakness affects the cost of living in Japan, which imports much of what it consumes, the Associated Press said. The agency said the currency’s decline pushes prices higher, and that rising oil prices have intensified the pressure. In its July outlook, the Bank of Japan said annual consumer price inflation was likely to exceed 2% clearly from the second half of fiscal 2026. The bank cited the weak yen, higher oil prices and AI-related demand among the factors at play. That puts the currency’s move in the context of price pressures the bank is monitoring.

The Bank of Japan said it would continue raising interest rates and adjusting the degree of monetary easing in response to developments in economic activity, prices and financial conditions. It added that the timing and pace of adjustments would be assessed, without setting a fixed timetable in the statement. Japanese Finance Minister Satsuki Katayama said authorities "will not hesitate to carry out additional joint intervention." Her remarks follow the intervention reported in the third-quarter data, as authorities monitor the yen and import costs. The Associated Press reported that factors contributing to the yen’s long-term weakness remain in place, despite the possibility that the currency may take a slightly stronger path during the rest of the year.