The US Treasury and Japanese authorities conducted a joint yen-buying intervention on July 31 and August 1, marking the first coordinated currency operation between the two nations since 2011. The move came after the yen plummeted to 163.99 per dollar on July 23, a level not seen in roughly four decades.

What actually happened

US Treasury Secretary Scott Bessent characterized the intervention as a response to “disorderly yen movements” that threatened to destabilize broader financial markets. The New York Fed sold euros to purchase yen, routing trades through major banks including Goldman Sachs and Morgan Stanley.

Japanese authorities reportedly deployed approximately 8.45 trillion yen, roughly $53 billion, to defend their currency. The US contribution was estimated at $5 to $10 billion, a figure reportedly visible on Bessent’s notepad during discussions.

President Donald Trump publicly endorsed the operation, framing it as a stabilizing force for global markets. Bessent went further, stating the US “will not hesitate” to engage in additional joint interventions if necessary. He also characterized the yen as undervalued.

The intervention followed a Camp David meeting where the strategy was reportedly discussed, and built on a September 2025 joint statement between US and Japanese finance ministers on currency matters.

The carry trade connection to crypto

The yen carry trade is one of the oldest strategies in finance. Borrow in yen at Japan’s low interest rates, convert to dollars or another higher-yielding currency, and pocket the difference. When the yen weakens steadily, carry traders win twice: on the interest rate differential and on the currency movement. But when interventions hit and the yen strengthens rapidly, those positions unwind violently. Traders scramble to buy back yen, selling whatever assets they’d parked the borrowed money in.

We saw a version of this in August 2024, when a modest yen strengthening contributed to a global equity selloff that dragged crypto down with it. Bitcoin dropped sharply in that episode as carry trade unwinding rippled through every asset class.

A coordinated intervention of this magnitude, roughly $60 billion combined, has the potential to trigger similar dynamics if it produces a sustained yen rally. Traders running leveraged carry positions may be forced to liquidate holdings across equities, bonds, and yes, crypto to cover yen-denominated obligations.

Bessent’s comment that the yen is “undervalued” is particularly worth watching. If markets interpret that as a signal of sustained US support for yen strength, it could gradually unwind carry trade positions in a more controlled fashion.