The recent joint intervention on the yen by the US Treasury and Japan’s Finance Ministry—estimated at ¥14tn—was a small‑scale move that may lift the currency briefly but is unlikely to change fundamentals. The Bank of Japan, acting under the Ministry, can buy yen and securities to push the yen up, yet investors can quickly reverse that effect if underlying conditions stay unchanged.

A lasting impact would require a shift in fundamentals, such as a faster rate hike. BoJ Governor Kazuo Ueda has kept the benchmark at 1% to support weak consumer demand, despite inflation risks of exceeding the 2% target. The intervention therefore seems more a signal of concern than a decisive policy change.

The intervention also marked the first US Treasury participation in over 15 years, buying yen with euros rather than dollars. Secretary Scott Bessent warned that selling dollar securities to prop up the yen would strain the long end of the Treasury market. The euro purchase avoided extra Treasury sales and reflected a shift in the dollar’s reserve status.

These moves suggest the dollar is no longer the unquestioned reserve currency. Central banks now face a growing need to diversify reserves, as the US Treasury’s limited willingness to sell Treasuries signals a new era of currency activism. Other countries are likely to seek more attractive, readily usable alternatives.