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Why the U.S. stepped in after decades to prop up Japan's yen, and what's at stake
By Lee Ying Shan
CNBC, New York
Monday, August 3, 2026
Washington's decision to join Japan in supporting the battered yen has prompted questions over what motivated the rare coordinated intervention, with analysts pointing to concerns over U.S. Treasury markets and Japan's financial system.
Tokyo has grown increasingly wary of the yen's decline, which recently dropped to its weakest level against the dollar in nearly four decades. The yen had been hovering at multi-decade lows, sliding to 163.73 per dollar last Thursday before rebounding to 157.57 on Friday.
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The coordinated intervention was the first U.S.-Japan joint operation to buy yen since 1998, and the first coordinated intervention involving the two countries since the G7 acted to weaken the yen after the 2011 earthquake.
Industry veterans told CNBC that one of Washington's biggest concerns was avoiding a scenario where Japan would need to dump large quantities of Treasurys to finance unilateral intervention, given how the north Asian nation is the largest foreign holder of U.S. government debt.
Louise Loo, head of Asia economics at Oxford Economics, said this was "possibly one of the key reasons" behind U.S. participation.
"There is a self-preservation element here. Volatile markets driven by potentially fiscally-aggressive policies from Japan could extend to the U.S. Treasury markets, destabilizing the dollar."
Tokyo's and Washington's emphasis on the Federal Reserve's standing FIMA repo facility -- which allows foreign central banks to obtain dollar liquidity without selling Treasurys outright -- "was a clue that they'd like to avoid forced-selling as much as possible," she said.
Japan's Finance Ministry said Monday it plans to use the FIMA repo facility for future interventions. Masahiko Loo, senior macro strategist at State Street, said the signal "may be bigger than the intervention itself." ...
... For the remainder of the report:
https://www.cnbc.com/2026/08/03/japan-yen-intervention-us-treasurys-euros-.html
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