Japan just ran one of the most expensive currency defense operations in modern history. The result? The yen kept falling anyway.
Between April 28 and May 27, 2026, Japan deployed a record 11.7 trillion yen, roughly $73.6 billion, into forex markets to prop up its beleaguered currency. By late June, the yen had slumped to 162.41 per dollar, its weakest level since July 2024 and approaching territory not seen since 1986.
Treating symptoms, not the disease
Reuters correspondent Rocky Swift laid out the core problem during a July 8 podcast: these interventions are treating symptoms while ignoring the underlying condition. Japan’s fundamental economic challenges, including massive government debt levels and a yawning interest rate gap with the United States, remain firmly in place.
The mechanics are straightforward. Japan sells dollar reserves and buys yen to create artificial demand. The yen strengthens temporarily. Then the interest rate differential reasserts itself and the yen weakens again.
