The day after the intervention, markets were quietly selling the yen back. On May 1, USD/JPY had already crept back toward the 156.60s, only hours after Japan's first yen-buying intervention in 21 months pulled it down to 155.50. Vice Finance Minister Atsushi Mimura signaled more action with a single phrase: "Golden Week is just getting started." But against trade deficits, an oil-import bill, yen weakness across all major pairs, and a 40-trillion-yen carry trade overhang, could intervention actually change the trend? It could not.

Story so far: On April 28, the Bank of Japan held rates with three dissenters. On April 29, markets delivered a no-confidence verdict, yen above 160 and JGB yields at a 27-year high. On April 30 evening, the government and BOJ finally pulled the trigger, executing Japan's first yen-buying intervention in 21 months and pushing the dollar from above 160 to 155.50. The full chronology is covered in our previous article on the "final evacuation warning" intervention. This article is about what happened the day after.

"Just the Beginning", Mimura's Second Verbal Strike

On the morning of May 1, reporters asked Vice Finance Minister Atsushi Mimura whether "the timing for decisive action" still applied.

His answer was almost poetically brief.

"I will simply say I recognize that Golden Week is still in its early stages."

That single line moved the market. After his comment, USD/JPY rallied back toward 155.50. Combined with his "final evacuation warning" line on April 30, this was the second straight day Mimura succeeded with verbal intervention.

But the victory faded within the same trading day. By 5 p.m. local time on May 1, USD/JPY was back at 156.62-63, already more than a yen above the post-intervention low. Market estimates put the April 30 night operation at 5 to 5.5 trillion yen. The Ministry of Finance later disclosed that the total between April 28 and May 27 came to 11.7349 trillion yen, the largest monthly yen-buying campaign ever recorded. And still the trend would not budge.

Why does so much "live ammunition" lose effect within a day? Because yen weakness right now is not speculative noise. It is structural.

Structure 1: Trade Deficit, Five Years of Bleeding

The notion of Japan as an "export superpower" is a 20th-century memory.

According to the Japan Foreign Trade Council's December 2025 outlook, Japan's customs trade balance for fiscal year 2025 is projected at a 1.42 trillion yen ($9 billion) deficit, the fifth consecutive year of deficit. While this is far smaller than the record 20.5 trillion yen deficit of fiscal 2022 (driven by the resource shock following Russia's invasion of Ukraine), the structural deficit pattern has now hardened.

The reason is energy. Japan's energy self-sufficiency rate is roughly 13%. The country imports 99.7% of its crude oil and 97.7% of its LNG. When the yen weakens, imported fuel costs balloon in yen terms.

Layered on top of this is the Iran crisis. WTI crude is trading near $110 per barrel, up 38% from April 17. If the de facto closure of the Strait of Hormuz continues, Japan's import bill will grow further.

As Jiji Press summarized, higher oil prices feed directly into Japan's worsening trade balance and add to the yen-selling pressure through dollar payments abroad. This is not the kind of flow intervention can stop. As long as Japanese importers buy dollars every month to pay for crude, the yen keeps getting sold.

Structure 2: The "Yen That Doesn't Come Home"

Many readers will object: "But isn't Japan one of the world's largest net creditor nations?"

True. According to Japan's Ministry of Finance, the country's net external assets at the end of 2024 stood at 533 trillion yen, a record high for the sixth consecutive year.

But the bigger headline is this: at the end of 2024, Japan lost its 34-year-long status as the world's largest net creditor nation, surpassed by Germany at roughly 569.6 trillion yen, with China close behind at 516.3 trillion yen. The end-2025 figures, released in May 2026, pushed Japan down again: net external assets reached a fresh record of 561.75 trillion yen, and Japan still slipped to third place, now behind China as well. The stock keeps growing while the ranking keeps falling.

And there is a deeper problem. As a Mizuho Bank analysis points out, while Japan's primary income balance, the dividends and interest from those overseas assets, is projected at over 40 trillion yen surplus for fiscal 2025, the composition has shifted dramatically. Direct investment now accounts for 56% of net external assets, up from a much lower share a decade ago. The era of Japan's external assets being mostly U.S. Treasury holdings is over.

Why does this matter? Because direct investment income largely gets reinvested abroad in local currencies. As Mizuho's Daisuke Karakama put it, "the current account is in surplus on paper, but in cash flow terms it is intermittently in deficit." The profits Japanese companies earn abroad no longer come home as yen-buying flows.

The old equation, current account surplus equals yen-buying pressure, has quietly broken down.

Structure 3: This Isn't Just About the Dollar

Mention "weak yen" and most people picture USD/JPY. But the current weakness is yen-specific, not dollar-specific.

EUR/JPY is trading in the 186 range, an all-time high. The yen is similarly weak against the Chinese yuan, Australian dollar, and British pound. On a real effective exchange rate basis, the yen's purchasing power has fallen to 1970s levels.

This forces a difficult conclusion: dollar strength is not the main driver. The yen itself is being sold against everything.

The reason is straightforward: Japan is the only developed economy still stuck with abnormally low rates. The Federal Reserve's target range for the federal funds rate is 3.50-3.75%, the European Central Bank's rate is 2.0%, and the Bank of England's is 3.75%. The Bank of Japan's? 0.75%. Among major economies, Japan is alone at the bottom.

Central Bank Scorecard, The Final Week of April 2026

By coincidence, the world's major central banks all made policy decisions in this same week. All four held rates, but the breakdown of dissents was strikingly varied.

Central Bank Policy Rate Decision Dissents Notes
BOJ (Apr 28) 0.75% Hold 3 (hawkish) Most dissents under Ueda
FOMC (Apr 29) 3.50-3.75% Hold 4 Most since October 1992
ECB (Apr 30) 2.00% Hold Unanimous 5th consecutive hold
BOE 3.75% Hold , Stagflation concerns

Notice that both BOJ and FOMC saw their dissents come from hawks. Inflation concern is a global theme. But Japan's catching-up pace is dramatically slower than the others. The U.S.-Japan policy rate gap exceeds 3.5 percentage points; the Japan-Eurozone gap is 1.25 points. Until that closes, the yen carry trade, borrowing cheap yen to buy higher-yielding currencies, won't unwind.

The Bank for International Settlements estimates the carry trade at roughly 40 trillion yen ($250 billion). In August 2024, when BOJ hike expectations triggered a partial unwind, USD/JPY collapsed from 161 to 141 in three weeks and the Nikkei fell 12% in a single session, what markets called the "Black Monday redux."

That same time bomb, now larger, is still ticking. Intervention does nothing to defuse it.

Daily Life in Japan, The Pain in Numbers

This structural yen weakness is seeping quietly but mercilessly into daily life.

April's Tokyo CPI rose 1.5% year-over-year, with the pace of gains slowing for five consecutive months, but inflation persists. Electricity and gas bills will see significant hikes from June as government subsidy programs change. Mortgage rates on Flat 35 loans (21+ year fixed) have risen for two consecutive months.

Foreign-currency subscriptions also bite. Netflix, Adobe Creative Cloud, AWS, Microsoft 365, ChatGPT Plus, every yen depreciation triggers another price hike. For a typical salaryman household, this adds 50,000 to 100,000 yen ($300-650) annually.

Small and medium-sized enterprises (SMEs) feel it worst. Manufacturers using imported raw materials, IT companies dependent on overseas SaaS, wholesalers buying in dollars. Price pass-through is incomplete and margins keep getting squeezed.

The exceptions are exporters and the inbound tourism industry.

The Inbound Paradox, Intervention Is a Headwind for Tourism

The tourism sector probably doesn't celebrate the yen returning to 155.

In 2025, foreign visitors to Japan hit a record 42.68 million, with spending reaching 9.4549 trillion yen, both all-time highs. Inbound spending in the April to June 2026 quarter came to 2.5096 trillion yen, a record for a second quarter. The fuel for this boom has been one thing: Japan looking cheap. Whether the dollar is at 160 or 155, foreign visitors still see Japan as a 20-30% bargain compared to other developed countries.

Premium ryokan rooms in Kyoto, sushi in Ginza, ski lift tickets in Hokkaido, all priced well below European and American equivalents. This drives repeat visits and channels foreign currency into rural economies.

If intervention pushes the yen stronger, tourism revenues shrink in proportion. Conversely, household budgets dependent on imported food and energy get relief. Intervention is, at root, a policy that helps some Japanese while hurting others.

So What Actually Stops the Yen Decline?

Economists' consensus comes down to three drivers.

1. Fed rate cuts. Once the Fed pivots to easing, the rate gap closes automatically. Powell's term as chair ended on May 15, though he stayed on the Board, and Trump nominee Kevin Warsh took over. The Fed has since dropped its easing bias entirely; by July, rate markets were fully pricing a hike by October. The gap is not closing from the US side.

2. BOJ hikes. At its June 15-16 meeting the BOJ did raise the policy rate from 0.75 to 1.0 percent, the highest since 1995. The vote was 7-1, with Toichiro Asada dissenting; Governor Ueda was hospitalized and Deputy Governor Ryozo Himino chaired. USD/JPY still reached 162.84 on July 1, a roughly 40-year high. Moving one side of the gap does not help if the other side moves too.

3. Structural reform. Higher energy self-sufficiency (nuclear restarts, renewables expansion), services-balance improvement (inbound tourism is already contributing), reduction of the digital trade deficit (developing domestic cloud and SaaS). All of these take years.

Intervention delivers none of these. What it buys is time. The question is whether Japan can use that time to actually change the structure.

Conclusion, What "Just the Beginning" Really Means

When Mimura said "just the beginning," what he likely meant is this. During Golden Week (May 3-6), Tokyo market liquidity dries up and speculators tend to push the yen lower. If USD/JPY threatens 160 again, the Finance Ministry will not hesitate to fire another round.

That is sound tactics. But strategically, intervention is symptomatic treatment. Past intervention episodes, roughly 9.1 trillion yen in 2022, over 15 trillion yen across 2024, never determined the eventual yen trajectory by themselves. What did was the monetary policy shifts that followed (Fed cuts, BOJ hikes). Intervention was always just buying time.

Japan's foreign reserves total around $1.2 trillion, roughly 192 trillion yen at 160 to the dollar, so theoretically tens of trillions in additional intervention is possible. But selling U.S. Treasuries to buy yen affects U.S. interest rate markets. The Trump administration's tolerance has political limits.

The Vice Minister who said "just the beginning" had signed up for a marathon, and he knew it. Intervention did continue intermittently through Golden Week, and the total swelled to a record 11.7 trillion yen. As of late July the yen sits around 162 and no second major operation has come. The structure has not moved at all.

In Japan this week, foreign exchange, interest rates, and oil prices triangulated into a triple squeeze that drove the government into a 21-month-first intervention. Yet within a day, the yen is being sold back. How does your country's central bank think about currency defense? And how do you read Japan's current situation, where intervention alone clearly cannot stop the trend? Share your perspective in the comments.

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