Japan Strategy: US-Japan coordinated intervention and USD/JPY stabilization as tailwinds for Japan equities

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Japan Strategy: US-Japan coordinated intervention and USD/JPY stabilization as tailwinds for Japan equities

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03 Aug 2026 09:33:16 ET │ 12 pages

Japan Strategy

US-Japan coordinated intervention and USD/JPY stabilization as

tailwinds for Japan equities

Ryota Sakagami AC

CITI'S TAKE +81-3-6776-4653

While the USD/JPY rate has seen rapid yen strengthening following the ryota.sakagami@citi.com

unprecedented coordinated intervention by US and Japanese authorities, Keishi Uedawe believe this move is not necessarily negative for Japanese equities.

Japanese corporate earnings exhibit less sensitivity to the USD/JPY rate +81-3-6776-5110

than they once did, and with many companies setting conservative keishi.ueda@citi.com

exchange rate assumptions, we expect little earnings impact as long as

USD/JPY stabilizes around ¥150-¥155/$. Moreover, forex market

stabilization could reduce policy and fiscal uncertainties while potentially

encouraging foreign investor buying of Japan equities. We believe the

essential significance of this coordinated intervention lies in curbing

excessive yen weakness and stabilizing the USD/JPY exchange rate, which

is likely to serve as a tailwind for the overall Japanese equity market.

Unprecedented coordinated intervention by the US and Japan — Following

coordinated intervention by US and Japanese authorities in the forex market last

weekend, with both sides signaling readiness for additional action, USD/JPY surged

from the upper ¥163/$ level to temporarily reach the ¥155/$ level. This marks the first

US-Japan coordinated intervention in the 15 years since 2011 and the first yen-

buying intervention in the 28 years since 1998. We view this as confirmation of the

strong commitment by US and Japanese authorities to prevent further yen