US intervention of the yen revives currency diplomacy as a geoeconomic tool

ON JUL 31, 2026, the US did something it had not done in more than two decades: It intervened directly in foreign exchange markets to prop up another country’s currency. 

The US Treasury, acting through the Federal Reserve Bank of New York, sold euros from its reserves and used the proceeds to buy Japanese yen, joining a Bank of Japan (BOJ) operation that may have deployed US$53 billion.

It was the first joint US-Japan yen-buying intervention since 1998, and the first time that Washington backed the yen specifically since the Asian financial crisis.