Japan confirmed Monday it bought yen alongside the U.S. Treasury last week, the first joint currency action since 2011, with Bitcoin (BTC) holding near $63,000.
Key Points:
- Japan's Finance Ministry said it conducted coordinated yen-buying intervention with the U.S. Treasury on Friday, the first joint action of its kind since 2011.
- Speculators held 163,412 net short yen contracts as of July 28, leaving carry trades exposed to a sharp reversal.
- Bitcoin traded near $63,100 on Monday as the yen surged and traders watched for further official buying.
Katayama Confirms Coordinated Yen Buying
Japan's Finance Ministry said Monday that it had conducted coordinated yen-buying intervention with the U.S. Treasury Department on Friday. Finance Minister Satsuki Katayama said the operation countered excessive volatility and disorderly movements in the currency in recent months. Tokyo will not hesitate to repeat the exercise, the ministry added.
The move marks the first coordinated action by the two governments since 2011, when they sold yen together to weaken it after the earthquake in eastern Japan.
President Donald Trump told reporters Sunday that Washington stepped in as a gesture of friendship and to support the global economy. Treasury Secretary Scott Bessent stated that Friday's operation curbed disorderly yen swings, and he repeated his call for higher Japanese interest rates, backing what he described as Tokyo's push to correct a substantial undervaluation of the yen.
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Bitcoin Faces Carry Trade Risk
The dollar slipped 0.2% to 157.07 yen after Trump spoke, well off the 40-year high near 164 set late last month. Bitcoin traded near $63,100 on Monday, down roughly 0.5%, as the yen leapt and desks braced for more official buying. Central bank data indicated Tokyo may have sold as much as $58.97 billion buying yen in New York on Thursday.
Positioning explains why crypto desks are watching so closely, since a stronger yen raises the cost of the borrowings that fund leveraged bets. Non-commercial yen short positions reached 163,412 contracts as of July 28, up 11,287 in a single week, and a rapid unwind of yen-funded trades preceded the mid-2024 selloff that pulled Bitcoin down to $50,000 from $65,000.
Robin Brooks of the Peterson Institute for International Economics argued the coordinated action could end up weakening confidence in the yen rather than restoring it. Takeshi Minami of the Norinchukin Research Institute flagged fiscal worries rather than rate differentials as the main driver of the slide. The ministry also said it plans to tap the Federal Reserve's foreign and international repo facility, a route that raises dollars without selling U.S. Treasuries.
Bank Of Japan Rate Path Still Decides It
Tokyo has tried this before with mixed results, spending about 11.73 trillion yen, roughly $73 billion, on yen purchases across April and May. The central bank then lifted its policy rate to a 31-year high of 1% in June and held there on July 31, yet the currency still sank to four-decade lows last week.
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