Last week, the US joined forces with Japan to try to stop the yen’s slide. It’s the first time the two sides have intervened in the Japanese currency in 15 years, and in many ways it was an unprecedented and unusual move, with Treasury Secretary Scott Bessent choosing to sell euros (as opposed to dollars) and the use of a little‑known Federal Reserve repo facility. The decision came after the yen fell sharply against the dollar, prompting concerns that the currency’s decline could destabilise markets and trade balances.

The intervention involved coordinated purchases of yen by the US Treasury and the Bank of Japan, aimed at raising the currency’s value and curbing speculation. By selling euros, the Treasury signalled a shift away from the usual dollar‑based operations, while the repo facility allowed the US to inject liquidity quickly.

Analysts are watching whether this joint effort will be enough to reverse the trend or merely a temporary blip. The long‑term effectiveness depends on market confidence, the persistence of global risk‑aversion, and the willingness of other central banks to follow.

Brad Setser of Bloomberg Markets will discuss the implications of the move and the potential for future coordinated actions.