Economy
Inside US-Japan pact to conduct 1st joint yen intervention since 2011
Tokyo and Washington conducted a coordinated yen-buying intervention and will not hesitate to take further action, Japan’s Finance Ministry said on Monday, confirming a rare bilateral move to halt the yen’s slide to fresh 40-year lows.
The move underscored both countries’ resolve to prevent a selloff in the yen and Japanese government bonds (JGBs) from causing global spillovers, such as adding upward pressure on already rising U.S. Treasury yields, analysts said.
The joint intervention was the first since 2011’s coordinated action to weaken the yen following the devastating earthquake in eastern Japan.
President Donald Trump said on Sunday the United States was helping Japan prop up the yen as a sign of friendship and to help the world economy.
In the statement, Japan’s Finance Ministry said Friday’s yen-buying intervention with the U.S. Treasury Department “countered excessive volatility and disorderly movements in the Japanese yen in recent months.”
“We will not hesitate conducting further coordinated intervention,” Finance Minister Satsuki Katayama told reporters on Monday.
The yen surged more than 1% to 155.20 per dollar after the announcement, its strongest since early May and well off the 40-year low near 164 hit last month, as traders remained on alert for more intervention.
The joint effort to fight off speculative bets against the yen followed months of preparation by the two nations and a rare and public alignment of interests in Washington and Tokyo over exchange rates.
While unilateral efforts by Japanese authorities to stop sharp yen selling in the past have failed to provide a firm floor for the currency, U.S. Treasury Secretary Scott Bessent’s verbal support for a stronger yen has given bureaucrats in Tokyo a new tool in their fight this year.
For Japan, a weak yen has fanned import prices, creating cost-of-living headaches for successive governments, including current Prime Minister Sanae Takaichi’s.
For the U.S., a weak yen blunts the trade advantage from Trump’s flagship tariffs while a related sell-off in Japanese government bonds could spill over to U.S. Treasury yields.
The shared currency anxiety has forged increasingly cozy bilateral conversations about exchange rates, historically a diplomatically thorny topic for the two economic powers, but also added new pressure for the Bank of Japan (BOJ) to persist with rate hikes.
U.S. participation in yen-buying intervention was considered as early as January, when the New York Federal Reserve made rare rate checks to help Tokyo combat yen declines, a Japanese government official with knowledge of the preparations told Reuters.
“Including online meetings, we’ve held talks about 10 times for discussions that included exchange rates,” Japanese Finance Minister Satsuki Katayama said on Monday on how frequently she spoke with Bessent.
“When he visited Japan in May, we talked three-and-a-half hours, including over dinner,” Katayama said upon announcing the joint intervention.
The May talks followed Japan’s huge yen-buying intervention between late April and early May, which failed to reverse the currency’s downtrend.
Before Friday’s move, Japan may have sold as much as $58.97 billion to buy yen when it intervened in New York markets on Thursday, BOJ data suggested.
In a sign negotiations were intensifying, Katayama said after the May meeting the two have been “coordinating very closely on foreign exchange and will continue to do so.”
Bessent, too, said Japan’s fundamentals are “strong and resilient, and that will be reflected in the exchange rate.”
He also repeated his calls for faster BOJ interest rate increases, signaling Washington’s concern its slow pace of hikes could leave the central bank behind the curve in addressing inflation.
A month later, the BOJ raised interest rates to a 31-year high of 1% in a landmark step in policy normalization. But with Japan’s real borrowing costs deeply negative, the move failed to give a lasting boost to the sagging currency.
‘Let’s congregate tomorrow’
With the yen hitting a four-decade low this year, Japan’s top currency diplomat Atsushi Mimura has shifted tactics.
Instead of a daily stream of calibrated verbal warnings against speculators, Mimura has focused on working behind-the-scenes with U.S. counterparts, said two sources familiar with the preparations.
That means Mimura, who has sway over when to step in, has been less public, and kept markets guessing about the chance of intervention. He kept a low profile even as Katayama and Bessent held an online meeting in late June to discuss financial market developments.
“The joint intervention is the culmination of Japan’s alliance with the United States,” Mimura told reporters on Monday.
The need for action heightened in July, when concern over Takaichi’s expansionary fiscal and monetary stance drove the yen to recent lows, pushing up the cost of imports and hurting the administration’s approval ratings.
The U.S. administration was also grappling with rising inflation and Treasury yields, heightening the incentive to support Tokyo’s effort to combat market headwinds.
Nodding to Japan’s concern over the weak yen, the U.S. Treasury’s semi-annual currency report on July 24 echoed Tokyo’s warning against excessive yen volatility and pledged to continue “close consultations” with Japan on exchange-rate matters.
Both the U.S. Federal Reserve’s and BOJ’s policy meetings last week were seen as potentially vulnerable windows for the yen, as investors positioned themselves based on cues from both banks about the timing of future rate hikes.
Japan’s intervention campaign was closely coordinated with the BOJ, according to people familiar with the matter.
Using a speakerphone connected with a handful of staff at the Finance Ministry’s foreign-exchange division, Mimura gave the green light to buy yen for dollars late evening on July 30.
The move, which hit investors outside Tokyo hours and amid the BOJ’s two-day policy meeting, immediately firmed the yen to 157.80 per dollar from around 162.80.
When one of the staff told Mimura the yen was sliding back down toward 158, he said. “Yes. Let’s congregate tomorrow.”
Shortly after BOJ Governor Kazuo Ueda’s news briefing concluded on Friday, the yen spiked in what markets suspect may have been another bout of yen-buying intervention by Tokyo.
This time, Tokyo was joined by Washington.
The U.S. Treasury informed a number of banks that it might intervene in the yen market and that they should “stand ready for future action,” a source had told Reuters.
Bessent had a notepad at a Friday cabinet meeting with the words “To Do,” followed by “Buy Japanese Yen (JPY) $5-10 bill,” a Reuters photo showed.
A September rate hike?
The BOJ’s communication on its future rate plans last week was its most hawkish to date and crucially nodded to a line in the U.S. Treasury’s currency report that “monetary normalization would help reduce excessive exchange rate volatility.”
Carefully reading off a prepared script, Ueda emphasized the vigilance needed “more than ever” against upside price risks, read by analysts as all but confirming a September rate hike.
Those sentiments also received praise in Washington.
“We strongly support Japan’s decisive market and monetary steps to correct the substantial undervaluation of the yen,” Bessent said in an X post on Sunday, stressing anew his support for higher BOJ rates.
Mimura, too, said the government will align its currency policy with the BOJ’s monetary policy to address yen weakness, signaling the chance of a near-term rate hike.
In a separate X post, Bessent said he would meet Ueda at a U.S.-hosted G-20 finance leaders’ meeting in end-August – which precedes the BOJ’s next policy meeting on Sept. 17 and 18.
Markets now see the BOJ’s September meeting as live.
“Given Japan moved to prevent yen falls with the cooperation of the U.S., there’s a question of whether the BOJ can afford to forgo raising rates in September,” said Yuki Kimura, bond strategist at Okasan Securities.
Naomi Muguruma, chief bond strategist at Mitsubishi UFJ Morgan Stanley Securities, sees a September hike as near-given.
“Intervention only has a temporary effect in slowing currency moves. Faster rate hikes are probably needed to put a lasting floor on the yen,” she said.
“I feel like a September rate hike is a done deal. It won’t make sense for the BOJ to wait until October and cause another bout of yen declines.”
Doubts
In a sign of further Japan-U.S. coordination, Bessent said the U.S. would consider increasing in coming months the size of the Federal Reserve’s repurchase facility providing temporary dollar liquidity, calling the tool an “important backstop.”
The comment followed the Finance Ministry’s rare X post on Saturday that it had “a broad range of tools to address market liquidity needs,” including access to the Fed’s repurchase facility providing temporary dollar liquidity.
The Fed facility, introduced in 2020 to steady markets during the COVID-19 pandemic, allows Japan to raise dollar liquidity without outright sales of U.S. Treasuries, potentially easing funding pressures on Tokyo for intervention.
Some analysts doubt whether the latest round of action could counter structural factors driving down the yen, such as the rising cost of fuel from the Middle East conflict and the still wide Japan-U.S. interest rate differentials.
“The announcement effect of joint intervention is much bigger than solo action by Japan,” said Tsuyoshi Ueno, a senior economist at NLI Research Institute.
“But the fundamentals driving yen weakness haven’t changed, so we likely won’t see one-sided yen rises from this intervention.”
China’s Alibaba on Monday introduced its largest and most capable AI model to date, sending its shares higher, while a research firm reported that DeepSeek’s newest product features pricing more than 100 times cheaper than Anthropic’s Claude Fable 5.
The two developments highlight the rapid pace of advancement in artificial intelligence by Chinese tech firms, which are locked in a fierce and fast-moving battle to build more powerful systems without making them prohibitively expensive to run.
Both models – Alibaba’s Qwen3.8-Max and DeepSeek’s V4-Flash – underline Chinese commitment to open-weight models as the firms seek to gain traction among developers globally.
“Chinese AI companies have found an important market. Many business workflows do not need the industry’s very best model,” said Lian Jye Su, chief analyst at research firm Omdia.
“They need models that are good enough, affordable, transparent and accessible, and open-weight models help meet that demand.”
With an open-weight model, the underlying learned settings that allow developers to run or adapt the system are available for download. By contrast, OpenAI, Anthropic and Google have closed-source models.
Trillions of parameters
Alibaba’s new Qwen3.8-Max immediately shot up leaderboards assessing the capabilities of AI models after being unveiled on Monday, helping its shares jump 7% in Hong Kong trade.
The model has 2.4 trillion parameters, the numerical settings a model learns from data and uses to recognize patterns, generate answers, and carry out tasks. That puts it not too far behind domestic rival Moonshot AI’s Kimi K3, which was launched last month and has 2.8 trillion parameters.
A higher parameter figure does not automatically make a model better, but it has become a closely watched measure of the scale of the computing and data behind advanced AI systems.
Qwen3.8-Max was unveiled on crowdsourced, model-comparison platform Arena.AI. It soon became the highest-ranking Chinese model in terms of text models, though it still lags Claude Fable 5 and three Opus variants, which are all from Anthropic.
On Arena.AI’s leaderboard for AI models that analyse images and other visual material, Qwen3.8-Max ranked second globally, only behind a Claude Fable 5 variant.
Both Qwen3.8-Max and Kimi K3 can handle text, images and video, and process up to 1 million tokens at a time.
Tokens are chunks of data, often parts of words or short words, and a big figure means the model can take in large amounts of material in one go, such as long legal files, a large software codebase or hundreds of pages of documents.
The tech giant said the model, due to be released next week, completed a software-engineering project in 16 days. It uses a “mixture-of-experts” design, which divides work among specialized parts of the system instead of switching on the entire model for every request. Only 95 billion parameters are used at a time, reducing costs and response delays.
Ultra-cheap DeepSeek
DeepSeek’s V4-Flash model, released on Friday, is by far the least expensive to run on benchmark tests among well-known models globally, according to research firm Artificial Analysis.
The startup, which sources have said is preparing for a potential IPO, saw its R1 and V3 models become a global sensation in early 2025, triggering a sell-off in global tech stocks and raising questions about the large amounts U.S. companies were spending on AI.
V4-Flash charges $0.14 per million input tokens and $0.28 per million output tokens, according to San Francisco-based Artificial Analysis.
Artificial Analysis estimated V4-Flash’s average cost at 3 cents per test, compared with 86 cents for Kimi K3, $1.86 for OpenAI’s GPT-5.6 Sol and $3.15 for Claude Fable 5.
The comparison provides a more realistic measure of value than pricing alone because it accounts for the amount of data a model must process and generate to complete a task. A model with a low headline price can still prove expensive if it requires significantly more steps to produce an answer.
Annual consumer price inflation in Türkiye cooled to 31.75% in July, according to official data released Monday.
The rate slowed from 32.11% in June, the Turkish Statistical Institute (TurkStat) said.
On a monthly basis, consumer prices increased 1.78%, accelerating from a 0.99% rise in June.
Both figures came slightly below market expectations.
An Anadolu Agency (AA) survey had forecast an annual inflation of 31.8% and a monthly increase of 1.82%.
The consumer price index rose 19.86% compared with December 2025, while the 12-month moving average increase stood at 31.90%.
Among the three expenditure groups with the largest weights, annual prices increased 40.32% for housing, water, electricity, gas and other fuels, 37.53% for food and non-alcoholic beverages, and 30.83% for transportation.
Food and non-alcoholic beverages contributed 8.94 percentage points to the annual inflation rate, transportation 5.22 points, and housing 5.21 points.
On a monthly basis, transportation prices rose 2.59%, housing costs increased 2.25%, and food and non-alcoholic beverage prices climbed 1.61%.
Türkiye’s crude steel production rose 8.1% on an annual basis to 19.8 million metric tons in the January-June period, according to a report on Saturday referring to the data from the Turkish Steel Producers Association (TÇÜD).
In June alone, crude steel output increased 14.7% from the same month last year to 3.3 million tons, information obtained by Anadolu Agency (AA) from TÇÜD showed.
Final steel product consumption increased 0.4% year-on-year in June to 3.1 million tons, while consumption in the January-June period rose 6.6% to 19.9 million tons.
Steel exports rise
Steel product exports also increased 28.4% by volume in June from a year earlier to 1.7 million tons, while their value climbed 29.7% to $1.2 billion.
In the first six months of the year, exports rose 2.5% by volume compared with the same period of 2025, reaching 7.8 million tons, while export value increased 1.3% to $5.3 billion.
Imports decline in June
At the same time, steel product imports fell 0.8% by volume in June from a year earlier to 1.8 million tons, although their value increased 3.7% to $1.2 billion.
In the January-June period, imports edged up 0.3% by volume year-on-year to 9.3 million tons, while their value declined 2.4% to $6.3 billion.
The ratio of exports to imports improved from 80% in the first half of last year to 83% in the same period this year.
7th largest steel producer
TÇÜD Secretary-General Veysel Yayan said Türkiye maintained its position as the world’s seventh-largest crude steel producer, remaining ahead of Germany.
He noted that the decline seen during the first five months of the year was reversed by the strong performance in June, driven particularly by robust demand from the Middle East and South America.
According to Yayan, steel exports to the Middle East surged 80% in June to 212,600 tons, while exports to South America jumped 406% to 182,500 tons.
He added that the U.K., where exports rose 246% to 407,000 tons in the first six months, and South America, where exports increased 81% to 643,000 tons, stood out as the strongest markets.
In contrast, the European Union market remained weak. Exports of steel products to the bloc fell 22% in the first half of the year to 2.6 million tons, making the EU the only regional market where exports declined.
“In the coming period, the Turkish steel sector needs to create long-term and cost-effective financing models to achieve its goals of transforming its current production capacity into a higher value-added, technology-oriented and sustainable structure, and accelerating investments in energy efficiency, low-carbon production and technological modernization,” Yayan said.
The U.S. and Japan are said to have jointly intervened to prop up the Japanese yen for the first time in nearly 30 years after the currency plunged to its weakest level in decades, media reports, including initial Financial Times (FT) reporting, indicated.
The reported intervention came after the yen slid to 163.24 per dollar last month, its weakest level since 1986, as higher U.S. interest rates, rising oil prices and persistent capital outflows weighed on the currency.
The newspaper reported, citing people familiar with the matter, that the Federal Reserve Bank of New York took the unusual step of selling euros to buy yen on behalf of the U.S. Treasury on Friday.
The transactions were carried out through Goldman Sachs and Morgan Stanley, according to the Financial Times.
Washington’s move came as the yen rebounded sharply last week, fuelling speculation that Japanese authorities had also intervened in currency markets.
The unit was trading at 160.53 against the dollar on Friday, having risen as high as 158 yen a day earlier.
Meanwhile, a Reuters report on Sunday said that Japan was to announce that Tokyo and Washington indeed took joint action on yen as soon as Monday.
Japanese Finance Minister Satsuki Katayama will announce on Monday that Tokyo and Washington took joint action to arrest the yen’s slide to 40-year lows, two Japanese government officials told Reuters.
“Whether Tokyo was actually involved remains unclear, but the price action had all the familiar fingerprints,” Stephen Innes at SPI Asset Management wrote in a comment.
Analysts cited by FT estimated Japan’s intervention may have totalled about 8.45 trillion yen ($52.8 billion).
The Nikkei business daily put the amount at between 6 trillion and 7 trillion yen.
According to FT, the move would be the first coordinated U.S.-Japan effort to support the yen since 1998.
A recent Reuters photo of U.S. Treasury Secretary Scott Bessent’s notepad during a cabinet meeting at Camp David in Maryland showed the words “To Do,” followed by “Buy Japanese Yen (JPY) $5-10 bil.” The Treasury did not respond when approached to comment on the matter.
While surging oil prices and concerns over debt are major reasons for the yen’s weakness, a key driver is the wide gap between interest rates in Japan and those in the U.S. and other major economies.
And with markets increasingly betting that the U.S. Federal Reserve (Fed) could hike rates again before the end of the year, the divergence is more pronounced.
This gap has encouraged investors to borrow cheaply in yen and invest in other assets outside Japan with better returns, commonly known as a “carry trade,” resulting in capital outflows and downside for the yen.
Türkiye’s domestically developed fifth-generation fighter jet has successfully completed the pre-flight taxi test of its latest prototype, its developer said Friday.
Footage on social media showed the Kaan warplane conducting the ground test, with technical personnel present as the aircraft taxied under its own power.
Turkish Aerospace Industries (TAI) said the test was completed successfully but did not disclose additional technical details.
Kaan is Türkiye’s indigenous fifth-generation multirole fighter being developed to meet the operational requirements of the Turkish Air Force and is expected to replace the aging F-16 fleet over the coming decades.
The aircraft made its maiden flight in February 2024, remaining airborne for 13 minutes. It completed its second test flight in May the same year, during which it flew for 14 minutes, reached an altitude of 10,000 feet and a speed of 230 knots.
Following the initial flight, the program entered a phase of production of additional prototypes that will continue the aircraft’s flight-test campaign.
Testing and development activities are continuing with the P1 and P2 prototypes, which feature a more advanced systems architecture.
According to TAI, Kaan is designed to provide air superiority through extended beyond-visual-range air-to-air combat capability, precision strike missions using internally carried weapons at high and supersonic speeds, and advanced combat performance supported by AI and neural network technologies.
The twin-engine fighter is being developed as a fifth-generation multirole platform capable of conducting both air-to-air and air-to-ground missions.
Türkiye plans to deliver the first batch of Kaan jets to the Turkish Air Force by the end of 2028, while a domestically developed engine is expected to power the aircraft in the 2030s.
Türkiye’s foreign trade deficit widened more than 26% last month, despite exports seeing their highest-ever June figure, official data showed Friday.
Outbound shipments jumped 21.7% year-over-year to $24.92 billion (TL 1.18 trillion) in June, the third-highest monthly export total ever, Trade Minister Ömer Bolat said.
Imports increased 23% from a year earlier to $35.29 billion, provisional figures from the Turkish Statistical Institute and the Trade Ministry showed.
The trade gap widened 26.2% year-over-year to $10.37 billion.
The export-to-import coverage ratio fell to 70.6% from 71.4% in June 2025.
Excluding energy products and non-monetary gold, exports climbed 23.2% to $23.3 billion, while imports rose 24.3% to just over $28 billion.
The energy- and gold-excluded trade deficit stood at $4.71 billion, with the export-to-import coverage ratio at 83.2%.
Manufactured products accounted for 93.7% of total exports in June, while agriculture, forestry and fishing represented 3.5% and mining and quarrying 2%.
Intermediate goods made up 71.4% of imports, followed by consumer and capital goods, each with a 14.2% share.
Germany was Türkiye’s largest export market in June, receiving $1.97 billion worth of goods. It was followed by the U.S. with $1.54 billion, Italy with $1.35 billion, the U.K. with $1.26 billion and Spain with $1.12 billion.
China was the leading source of imports with $5.28 billion, followed by Russia, Germany, the U.S. and Italy.
In the first half of the year, exports increased 3.5% year-over-year to $135.98 billion, while imports rose 4.6% to $189.12 billion.
The January-June trade gap widened 7.4% to $53.14 billion.
Annualized exports rose 4.1% year-over-year to $277.9 billion as of June, up by $11 billion from $266.9 billion a year earlier, Bolat said.
Exports of medium-high- and high-technology products increased 8.4% in the first half to $56.2 billion.
Despite geopolitical tensions, protectionist measures and weak external demand, Türkiye will continue working to exceed the Medium-Term Program’s export target of $282 billion, Bolat added.
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