From 1998 to 2011 and 2026: Japan’s History of Currency Intervention

Foreign-exchange intervention begins before the press conference and leaves fingerprints before the official statistics arrive. Dollar-yen suddenly moves several yen. Liquidity thins on electronic screens. Speculators close positions. Dealers ask one another whether “the authorities” have entered the market. Yet in the moment, no outsider knows with certainty who traded, how much was deployed or whether another wave is coming.

Japan’s intervention history is not a campaign to preserve one sacred exchange rate. In 1998, amid the Asian financial crisis and domestic banking fears, Tokyo bought yen to halt depreciation. From 2003 into 2004, it did the opposite on an enormous scale, selling yen to restrain appreciation that threatened an economy trapped in deflation. In 2011, after the earthquake and tsunami, the Group of Seven acted together against a sudden yen surge. In 2022 and 2024, Japan returned to yen buying as depreciation drove up import costs. In 2026, with the currency near four-decade lows, intervention entered a new phase involving regional action and reported U.S. participation.

What intervention is—and who controls it

In Japan, the finance minister holds authority over foreign-exchange policy. The Ministry of Finance decides whether to intervene, and the Bank of Japan executes trades as the government’s agent. To support a falling yen, Japan sells foreign currency assets—usually dollars—and buys yen. To restrain an excessively strong yen, it raises yen funding and buys foreign currency.

That makes intervention different from monetary policy. A BOJ rate increase changes financing conditions across the economy and can alter the underlying attraction of holding yen. Intervention places orders directly into the market and changes supply and demand immediately. One is a broad medicine designed to work through the economic system; the other is closer to emergency treatment for a market convulsion.

1998: depreciation, banking fear and an American signal

Japan entered 1998 deep inside its post-bubble malaise. The failures of Hokkaido Takushoku Bank and Yamaichi Securities had shaken confidence, while the Asian currency crisis spread from Thailand, Indonesia and South Korea across the region. The yen weakened into the 140s per dollar. A softer currency could support exporters, but this decline carried a more dangerous message: investors were losing faith in Japan’s capacity to repair its financial system.

Tokyo bought yen in April. In June, the United States joined with dollar sales and yen purchases. The significance exceeded the money deployed. The issuer of the world’s principal reserve currency was treating yen weakness not as a narrow Japanese complaint but as a risk to international stability. The yen rebounded, but intervention alone did not create the lasting turn. Bank recapitalization, financial-reconstruction legislation, and the global unwinding that followed Russia’s default and the collapse of Long-Term Capital Management all changed the backdrop.

2003–04: stopping a yen that was becoming too strong

Only a few years later, policy pointed in the opposite direction. Japan had not escaped deflation. Interest rates were near zero, and concern over the U.S. current-account deficit and the dollar created appreciation pressure on the yen. Officials feared that a stronger currency would squeeze exporters, push import prices lower and harden deflation.

From early 2003 through March 2004, Japan sold more than ¥35 trillion and bought dollars. It was the high-water mark of sustained, repeated intervention: not one surprise strike, but a long campaign. Foreign reserves expanded, reinforcing Japan’s role as a major holder of U.S. Treasury securities. Then, in March 2004, the campaign stopped abruptly—not because the exchange rate had reached a perfect number, but because global growth, exports and corporate earnings were improving, reducing the need to fight the market continuously.

2010–11: the paradox of a currency rising after catastrophe

Japan resumed yen-selling intervention in 2010 after an absence of more than six years. Then came March 11, 2011: the Great East Japan Earthquake, tsunami and Fukushima nuclear disaster. A national catastrophe might normally be expected to weaken a currency. Instead, traders anticipated that Japanese companies and insurers would repatriate overseas assets. Speculative buying joined the move, driving the yen to postwar highs.

On March 18, the G7 intervened together. Japan sold yen, while authorities in the United States, Europe, Britain and Canada acted in their markets. The BOJ governor said the concerted action was expected to contribute to stable exchange-rate formation. It was both a gesture of support for Japan and a warning that the world’s leading economies would not permit one-way speculation to add a currency shock to a physical disaster.

The problem did not end. Europe’s sovereign-debt crisis and global risk aversion pushed the yen higher again. Japan intervened alone in August and during October–November. On October 31, it sold more than ¥8 trillion in a single day, then a record. Coordination was powerful, but rare; after the shared signal, the financial burden and determination returned to Japan.

2022: the first yen-buying operation in 24 years

By 2022, the world had shifted into an era of inflation and rapid rate increases. The Federal Reserve tightened aggressively while the BOJ retained negative rates and yield-curve control. The widening rate gap rewarded investors for borrowing yen and buying higher-yielding assets abroad. At the same time, Japan imported expensive oil, gas and food.

On September 22, Japan sold dollars and bought yen for the first time since 1998. It returned in October, spending roughly ¥9 trillion in total. Officials emphasized the speed and speculative character of the move rather than defending a declared line. But the market’s question was unavoidable: if the BOJ continued holding yields down while the Ministry of Finance tried to stop depreciation, were the two arms of policy pulling in opposite directions?

2024: record-scale force, but no permanent secrecy

In spring 2024, the yen fell through 160 per dollar. The government bought yen on April 29 and May 1, spending a combined ¥9.7885 trillion. It deployed another ¥5.5348 trillion in July. Even when Tokyo does not immediately confirm an operation, market prices, BOJ current-account projections and later MOF statistics reveal the outline.

The lesson was not that large intervention is meaningless. It slowed the move and reminded speculators that a profitable one-way trade could suddenly reverse. But durable direction still depended on U.S. rates, BOJ policy, wages, inflation and trade flows. Intervention is most effective when it pushes the market at the moment underlying conditions are beginning to change.

2026: from unilateral defense to allied participation

In spring 2026, the yen again approached historic lows. The Ministry of Finance officially recorded ¥11.7349 trillion of intervention from April 28 through May 27—an extraordinary amount for a single monthly reporting period. Yet energy costs, the Japan-U.S. rate gap and global use of the yen as a funding currency kept pressure alive.

Late in July, Japan and South Korea were reported to have taken unusual parallel action to support their currencies. Reports then said the United States participated in yen purchases. Japanese government sources said Tokyo planned to explain the joint U.S.-Japan measures on August 3. Formal confirmation would make it the first direct U.S. operation in the yen market since 2011. But the arrow is reversed: the 2011 operation sold yen to stop appreciation; the 2026 episode buys yen to stop depreciation.

Why intervention works sometimes—and fades at others

The first ingredient is surprise. Even when traders expect intervention, unexpected timing, size or international participation can force a violent unwinding of positions. The second is financial capacity. Japan holds one of the world’s largest reserve pools, but global foreign-exchange turnover is immense; no reserve is infinite. The third is policy consistency. If rates, fiscal policy, energy costs and wage trends continue pushing against the intervention, its effects diminish.

The fourth is international legitimacy. Persistent efforts to cheapen a currency for industrial advantage invite criticism. Intervention aimed at disorderly movement and damaged market function is easier for partners to support. U.S. involvement in 1998, 2011 and potentially 2026 matters because it signals that the world’s largest financial power shares Japan’s diagnosis.

What intervention is really defending

The depreciation of 1998 reflected banking weakness and regional crisis. The appreciation of 2003 threatened exporters before Japan had escaped deflation. The 2011 surge imposed an added burden during a national disaster. The declines after 2022 reached households through imported fuel and food. The same currency can become dangerous in different directions for different reasons.

That is why success cannot be measured only by how many yen the exchange rate moves the next day. Did the operation break a one-way market? Did it give companies time to reset prices and investment? Did it allow the BOJ and government to align policy? Did it demonstrate internationally that disorder would not be ignored? Those are also intervention outcomes.

History is equally unforgiving. Governments can shock markets, but they cannot permanently command investors to ignore fundamentals. The 1998 turn required banking reform. The end of intervention in 2004 coincided with stronger global demand and profits. Yen appreciation returned after the 2011 action as Europe’s crisis deepened. Depreciation reappeared after the 2022 and 2024 operations while the rate gap persisted.

The question 2026 will leave to history

It is too early to know whether 2026 will resemble 1998—a genuine turning point—or 2024, a costly purchase of time. American participation is a powerful signal. The BOJ has opened the door to additional tightening. But energy prices, fiscal anxiety, U.S. yields and the global yen carry trade remain large forces.

An exchange-rate chart shows a single line. Behind it sit banking crises, deflation, earthquakes, inflation and alliance diplomacy. Each time Japan intervenes, it is defending more than the price of its currency. It is trying to preserve enough space between market speed and economic reality for the country to adjust without being torn apart.

1998, 2011 and 2026 involved different crises and opposite trades. Yet the common message endures: currencies are priced by markets—but when markets lose order, governments are not merely spectators.