The real reason Trump just rushed to help Japan

August 4, 2026 — 11:57am

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The joint Japanese and American intervention in currency markets to prop up the Japanese yen seems to have worked, for the moment at least. Whether it lasts is another matter.

On Thursday and Friday last week, the Bank of Japan and the US Treasury were in the market, with the BoJ selling dollars to buy yen and the US selling euros, peculiarly, to add to the buying.

It’s the first time since 2011 (after the Tohoku earthquake which led to a flood of repatriated funds held offshore by Japanese investors) that the US had intervened to affect the yen’s value, although on that previous occasion it was to weaken, rather than strengthen, the currency.

The BoJ and Treasury were prompted to intervene after the yen fell to 40-year lows against the dollar, despite the BoJ’s attempts to put a floor under it. With short-sellers piling in, the yen had weakened to more than 163 yen to the dollar, its weakest level since 1986.

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Stephen BartholomeuszSenior business columnist

Senior business columnist

The BoJ spent an estimated $US53 billion ($75.7 billion) on Thursday and another $US36 billion or so on Friday, with the US support likely to have been a fraction of that in dollar terms, but far more potent in terms of the signal it sent the market. The yen is now trading around 157 yen to the dollar.

Japan’s interest in strengthening its currency is obvious, America’s less so.

The inexorable slide in the value of the yen has, despite unsuccessful attempts by the BoJ in April and May to arrest it, been driven by Japan’s poor fiscal position, with new prime minister Sanae Takaichi planning an expansive program of tax cuts and spending in an economy where government debt is already more than 200 per cent of GDP (albeit that about half that debt........

© The Age