currency

US Japan Currency Intervention Signals Shift Away From G7 Coordination

Last week’s joint intervention by the United States and Japan to support the Japanese yen has raised fresh questions about the future of international currency coordination, as the operation proceeded without broader participation from other Group of Seven (G7) economies.

Although the intervention temporarily strengthened the yen, analysts argue that the absence of coordinated action from Europe and other major economies reflects a broader decline in multilateral economic cooperation and a growing preference for bilateral deals under the Trump administration.

The intervention was jointly carried out by Washington and Tokyo after the yen weakened to multi decade lows against the U.S. dollar. U.S. Treasury Secretary Scott Bessent and Japanese Finance Minister Satsuki Katayama later confirmed the operation and defended its objectives.

The yen has largely maintained its gains since the intervention, although investors remain uncertain whether further support will follow or whether the Bank of Japan will reinforce the move through additional interest rate increases.

Treasury Market Concerns Shaped Washington’s Decision

One key factor behind U.S. involvement appears to have been concerns over the U.S. Treasury market.

Japan remains the largest foreign holder of U.S. government bonds. A large unilateral intervention by Tokyo would likely have required selling significant amounts of U.S. Treasuries to obtain dollars for prolonged currency operations, potentially disrupting already volatile bond markets.

By participating directly, the United States reportedly helped provide dollar liquidity while selling euros rather than dollars, reducing pressure on Treasury markets and limiting broader financial instability.

G7’s Absence Raises Questions

Despite the shared interest among G7 economies in preventing excessive currency volatility, other members of the group did not participate.

Historically, major currency interventions have often involved coordinated action across the G7. Following Japan’s 2011 earthquake and tsunami, G7 nations jointly intervened to weaken an excessively strong yen. Earlier coordinated efforts also included interventions supporting the euro in 2000 and global liquidity operations after the September 11 attacks.

In contrast, the latest operation remained strictly bilateral, even though the United States reportedly sold euros during the intervention without direct European participation.

The European Central Bank declined to comment publicly, while the International Monetary Fund has also remained largely silent.

Shift From Multilateralism to Bilateral Deals

The intervention reflects a broader shift in U.S. foreign economic policy under President Donald Trump, whose administration has increasingly favored bilateral negotiations over multilateral coordination.

Rather than pursuing comprehensive international agreements similar to the Plaza Accord or Louvre Accord, Washington has increasingly relied on country specific arrangements.

Japan has also deepened bilateral economic cooperation with the United States, including major investment commitments linked to previous tariff negotiations, reinforcing this new framework.

Regional Currency Pressures

U.S. officials also pointed to wider regional concerns.

Treasury Secretary Bessent argued that continued yen weakness risked placing downward pressure on other Asian currencies, particularly South Korea’s won, as exporters sought to remain competitive with Japanese manufacturers.

China’s yuan remains another major regional factor, although Beijing falls outside the G7 framework. Broader discussions involving China are expected only at future G20 meetings.

Historical Role of the G7

For decades, the G7 served as the primary forum for coordinated responses to major currency instability.

From stabilizing the euro during its early years to responding collectively after major financial crises, coordinated interventions carried significant market credibility because they demonstrated unified political and monetary commitment.

The latest U.S. Japan intervention marks a departure from that tradition, suggesting that future currency management may increasingly rely on bilateral arrangements rather than collective action.

Analysis

The U.S. Japan intervention highlights more than an attempt to stabilize the yen. It reflects a structural shift in global economic governance. The declining role of coordinated G7 action suggests that multilateral mechanisms are gradually giving way to transactional bilateral partnerships, particularly under the Trump administration.

While bilateral interventions may offer quicker and more flexible responses, they lack the collective market impact that historically made G7 operations highly effective. The absence of Europe and other major economies also raises questions about the future cohesion of the G7 as a forum for managing global financial stability.

For investors, this evolving landscape increases uncertainty. Without unified international coordination, currency markets may become more volatile as governments pursue national interests independently rather than through collective action. Whether future administrations restore broader multilateral cooperation or continue this bilateral approach will shape the next phase of global foreign exchange policy.

With information from Reuters.

Published on
30/06/2026 – 11:57 GMT+2

The Japanese yen fell to around 162.4 per dollar in Asian trading on Tuesday morning, its lowest level since 1986.

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The drop extends a punishing run for the yen, which has kept weakening despite the Bank of Japan’s efforts to support it, and now revives the prospect that the authorities will step into the market directly.

Japan’s finance minister, Satsuki Katayama, has already responded to the situation by stating that the government was ready to take “appropriate” and even “decisive” action against excessive currency moves, adding that she had confirmed with Washington that such a step remained an option.

Traders are now watching closely for any sign that Tokyo is selling US dollars to prop up the yen, as it did in the spring.

At the heart of the weakness is the current wide gap between Japanese and American interest rates.

Even after the Bank of Japan raised its benchmark to 1% in mid-June, its highest since 1995, Japanese yields remain far below those in the US, where ten-year government bonds have recently paid around 4.5%, compared with roughly 2.6% in Japan.

That gap sustains the so-called carry trade, in which investors borrow cheaply in yen to buy higher-yielding assets elsewhere, continually pushing the currency down.

A robust dollar has compounded the pressure.

The greenback has drawn safe-haven demand from tensions around the conflict involving Iran, while expectations that the US Federal Reserve could raise rates later this year, even as the Bank of Japan moves cautiously, have widened the divide further.

Japan’s heavy reliance on imported energy, which is costlier amid elevated oil prices, has also added to demand for US dollars.

A test for Tokyo

The renewed slide is a headache for policymakers who have already thrown considerable firepower at the problem.

Between April and May, Japan spent a record ¥11.7 trillion (€63.3bn) intervening in currency markets, the largest such effort on record, yet the Japanese yen has continued to weaken.

Domestic politics has not helped, with the big-spending, growth-focused agenda of Prime Minister Sanae Takaichi raising doubts about Japan’s fiscal discipline.

Analysts say the immediate risk of intervention is high, given that speculative bets against the Japanese yen have climbed to multi-year peaks and a fresh four-decade low tends to sharpen political anxiety in Tokyo.

However, many doubt that buying the currency would reverse its course for long, since the underlying rate gap remains firmly against it.

The Bank of Japan’s next policy decision, due on 31 July, is now in sharp focus, with further rate rises seen as the more durable route to stemming the decline.

For now, the Japanese yen remains at the mercy of forces its central bank has struggled to control.

As the European Union tries to fight its record-high €1 billion deficit per day with China, the bloc’s leaders are increasingly pointing to the problem of currency manipulation, which they say Beijing is using to make products even cheaper on the EU market – which is already flooded with Chinese imports.

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“An artificially low currency is an advantage for those who want to improve their economic competition positions,” German Chancellor Friedrich Merz said after the European Council summit on 19 June.

The matter of the Chinese currency and its management was also high on the agenda of last week’s G7 summit in France.

The signs are that this is a new front in Europe’s trade battle against Beijing. To understand why the devaluation of the yuan (or renminbi) matters, here are three things to know.

What’s wrong with the Chinese currency?

According to a report by the Haut Commissariat à la Stratégie au Plan, a French government advisory body, the undervaluation of the yuan is estimated at around 20-25 percent.

“While there is no universally recognised method for determining unequivocally whether a currency is significantly overvalued or undervalued, the assessment that the renminbi (RMB) is significantly undervalued is now widely shared, including among international institutions,” the report said.

In theory, China’s trade surpluses should naturally create demand for the yuan, leading to an appreciation of the currency, but it is not the case.

However, the devaluation of the yuan might not be the direct result of central bank intervention. Alicia Ferro Herrera, an expert at the Brussels-based think tank Bruegel, told Euronews that China prevents its currency from appreciating faster by not bringing all of its export revenues back to the mainland.

“They stay in Hong Kong and they are not converted into RMB,” she said.

How does it impact trade between China and the EU?

The EU deficit with China hit a record-high €359.9 billion in 2025. That same year marked the first time that all EU member states had a trade deficit with Beijing, including Germany, the EU’s largest economy.

“This is simply not sustainable,” European Commission President Ursula von der Leyen said last Friday.

According to the Haut Commissariat au Plan report, the undervaluation of the yuan plays a large part in keeping Chinese products competitive; as things stand, they are assessed by EU industry to be around 30-40 percent cheaper than European equivalents.

However, Ferro Herrera pointed out that the inflation differential also plays a great part.

“My estimate is that the inflation differential and its accumulation in Europe since the invasion of Ukraine explains about three quarters of the loss in external competitiveness,” she said.

What can the EU do?

In his remarks last Friday, Merz suggested the EU begin dialogue with China on the currency issue.

“We have to talk about this topic with each other,” he said. “It is in the interest of both sides.”

The German chancellor cited the 1985 Plaza Agreement, which saw the US, Japan, West Germany, the UK and France agree to depreciate the US dollar against the Japanese yen and the Deutsche Mark. The goal was to head off a protectionist turn from the US as its trade deficit deepened.

Merz also referred to the European Monetary System, which before the adoption of the euro relied on exchange-rate bands to limit currency fluctuations.

“That was a system where countries could coordinate through exchange-rate corridors,” he said.

Conversely, Ferro Herrera points out that the US did not push for any such negotiation when economic imbalances were discussed during the G7 last week.

In her view, Europe should monitor China’s export prices for major sector-by-sector deviations, since this is an important sign of overcapacity, as negative price growth occurs when goods cannot be sold.

Caracas, June 9, 2026 (venezuelanalysis.com) – Venezuela has registered the lowest month-to-month inflation figure since October 2024.

According to the Venezuelan Central Bank (BCV), consumer prices went up by 6.3 percent in May. Inflation has fallen for four consecutive months after hitting 32.6 percent in January, following the US military attack and kidnapping of President Nicolás Maduro.

Overall, prices have more than doubled in the first five months of 2026, and accumulated 12-month inflation currently stands at 525 percent. 

Despite the widespread use of the US dollar in cost structures, prices have likewise gone up by 12.5 percent over the last year when measured in USD, meaning a loss of purchasing power even for those with incomes pegged to the official exchange rate.

Venezuela’s inflation remains heavily correlated with currency instability. Despite the Central Bank devaluing the USD-bolívar exchange rate by more than 30 percent since March and providing significantly increased volumes offoreign currency to the private sector, a 30-40 percent gap remains between the official and parallel market rates.

Since January, the BCV has directed over US $5.5 billion in foreign currency via bank-run exchange tables, at more than double the rate of 2025, according to figures from Banca y Negocios. However, the chasmbetween official and parallel rates has persisted.

Many economists have identified the stabilization of the foreign exchange market as a necessary step for macroeconomic recovery, but critics have pointed to a lack of regulation and accountability in forex allocation as fueling currency speculation.

Caracas’ monetary and fiscal policy is presently subject to US control. Since January, the Trump administration has mandated that Venezuelan export revenues, principally oil sales, be deposited in US Treasury accounts. Washington returns an undisclosed portion of the proceeds at a time of its choosing.

The White House has likewise imposed that disbursed funds be channeled directly to the private sector via foreign exchange auctions, as well as outside auditing of Central Bank accounts by consulting giant Deloitte. Secretary of State Marco Rubio indicated in January that the Venezuelan government headed by Acting President Delcy Rodríguez would need to submit a “budget request” before accessing its own resources.

For its part, the Rodríguez administration has fast-tracked a series of pro-business reforms tailored to attract foreign investment, including in the oil, mining, and electricity sectors. 

As part of efforts to court US investors, Economic Vice President Calixto Ortega reportedly took part in a closed-door meeting with US officials and corporate representatives hosted by the Atlantic Council, a hawkish Washington-based think tank funded by the US government, its allies, and major corporations.

The opening to foreign investment has seen Western business executives flock to Caracas in recent weeks, often escorted by White House officials, to explore opportunities. Pro-Trump tech billionaires such as Fred Ehrsam have made repeated visits, while Peter Thiel’s Erebor Bank struck a corresponding banking agreement with Venezuela’s largest public bank.

Javier Kulesz, a strategist from investment bank Jefferies, relayed optimism after a visit to the South American country and forecast an imminent “stream of announcements” related to the country’s debt restructuring and investments in key economic sectors.

Edited by Lucas Koerner in Caracas.

The U.S. dollar edged lower, as investors tracked shifting developments around a potential Iran deal and the resulting moves in oil prices, which influenced inflation expectations and safe-haven demand.

The dollar index (DXY), which measures the greenback against a