Japan Needs Policy Reform, Not U.S. Reliance, to Halt Yen's Decline

The responsibility for restoring confidence in the yen rests with the Japanese government.

Japanese yen banknotes are displayed alongside U.S. dollar bills as Tokyo and Washington coordinate currency market intervention.

Relying on the United States will not reverse the negative cycle of a weakening yen and rising prices, The Mainichi argued in an editorial.

In response to the yen's historic depreciation, the Japanese and U.S. governments jointly intervened by purchasing yen in the foreign exchange market.

It marked the first coordinated intervention in 15 years, since 2011, when the yen surged following the Great East Japan Earthquake. It was also the first coordinated yen-buying intervention since 1998, when Japan faced a financial crisis stemming from bad loans at its banks.

Such interventions are rare outside major disasters or global economic crises because they can distort financial markets.

This time, however, the political interests of Prime Minister Sanae Takaichi's administration and U.S. President Donald Trump's administration aligned.

Japan had repeatedly intervened on its own by buying yen and selling dollars, but those efforts failed to reverse the currency's decline. Tokyo had therefore sought Washington's support.

With U.S. congressional midterm elections approaching in November, Washington was concerned that the adverse effects of "selling Japan"—marked by a weaker yen and rising long-term interest rates—could spill over into the U.S. economy.

U.S. Treasury Secretary Scott Bessent, who led the coordinated intervention, reportedly feared that instability in Japanese financial markets could push U.S. long-term interest rates higher.