Japan's Ministry of Finance intervened in the foreign-exchange market to buy the yen on Friday, acting in concert with the U.S. Treasury Department. The intervention marks the first time Japan has directly bought yen since 1998, according to Reuters.
The move comes as the yen has faced significant downward pressure, exacerbated by the U.S. Federal Reserve's aggressive interest rate hikes aimed at curbing inflation. Higher U.S. rates make dollar-denominated assets more attractive, leading to capital outflows from countries with lower interest rates, such as Japan.
Japanese officials had previously signaled their readiness to take action to curb excessive yen depreciation. The coordinated effort with the U.S. Treasury signals a shared concern over currency market stability. While the U.S. typically favors a strong dollar, it has also expressed a desire to avoid excessive volatility in global currency markets.