Japan may step up interventions in currency markets to support the yen after securing backing from the United States, as policymakers seek to curb rapid depreciation driven by global market volatility, Kyodo News writes.

Japanese authorities recently spent close to JPY10 trillion ($63bn) intervening after the yen weakened beyond the JPY160 per dollar level. Analysts said the move provided only temporary relief, with safe-haven flows linked to tensions in the Middle East continuing to weigh on the currency.

Support from US Treasury secretary Scott Bessent appears to reflect concern that large-scale Japanese intervention could prompt sales of US Treasury holdings to fund dollar purchases, potentially pushing US interest rates higher.

Finance minister Satsuki Katayama indicated that coordination between Tokyo and Washington remained strong following their first meeting since Japan’s intervention on April 30, with further suspected operations in early May. Bessent also highlighted ongoing cooperation in addressing excessive currency volatility.

Previous interventions in 2022 and 2024 saw dollar-yen rates return to pre-intervention levels within around two months, underlining the challenge of sustaining currency support.

Market participants view JPY160 to the dollar as a key threshold for Tokyo, given the impact of a weaker yen on import costs for energy, raw materials and food. Analysts suggested that repeated interventions could follow if the currency breaches this level again.

Analysts said US officials may be wary of the implications of large-scale Japanese intervention for bond markets, however, as any significant sale of US debt holdings could drive yields higher.