Prime Minister Sanae Takaichi’s government faced a widening policy test on August 4 as officials tried to calm inflation concerns after rare U.S.-Japan yen intervention, while the latest defense white paper framed Japan’s military buildup as part of a broader strategy for economic growth and national resilience.
The conflict involving Iran, the United States and Israel may be entering a more dangerous phase, with Tehran appearing increasingly willing to initiate attacks rather than merely respond to US strikes, while disruptions around the Strait of Hormuz threaten oil and liquefied natural gas supplies worldwide.
Prime Minister Sanae Takaichi entered August facing a sharper test of her economic leadership after Japan and the United States carried out a rare coordinated currency intervention to support the yen, turning the government’s cost-of-living agenda, fiscal policy and relationship with the Bank of Japan into one of the most politically sensitive issues of her administration.
U.S. President Donald Trump said the United States intervened to buy yen because of its strong relationship with Japan, describing the action as a sign of friendship and pledging that Washington would always support the country.
Japan and the United States conducted coordinated yen-buying intervention in the foreign exchange market to curb the currency's excessive decline, with Finance Minister Satsuki Katayama expected to announce the move on August 3, according to people familiar with the matter.
US Treasury Secretary Scott Bessent said the yen is undervalued, making an unusually direct assessment of the currency and signaling that Washington is unwilling to accept excessive weakness.