Japan’s top finance officials on Aug. 3 issued a stark warning to markets that they “will not hesitate” to conduct further currency interventions jointly with the United States, calling the partnership a “perfected form of the U.S.-Japan currency alliance.”

The warnings by Finance Minister Satsuki Katayama and Vice Minister of Finance for International Affairs Atsushi Mimura came after heavy yen buying on July 31 conducted in coordination with the U.S. Treasury.

“We are maintaining close communication with the U.S. Department of the Treasury,” Katayama told reporters. “We will not hesitate to conduct further coordinated interventions in the future.”

She reiterated a warning against speculation.

“As I have been saying, we will take decisive measures against what are truly disorderly movements,” Katayama said. “Those measures will be executed, and we are always ready to do so.”

Mimura, the ministry’s top foreign exchange diplomat, framed the cooperation in historic terms.

“This is the perfected form of the U.S.-Japan currency alliance,” he said.

He put traders on notice, adding: “We will not hesitate to conduct further coordinated interventions. The time from now is crucial. We will continue to respond without any negligence.”

The intervention had an immediate effect. The yen surged in the Tokyo market on Monday morning, reaching 155.20 to the dollar at one point.

That represented a gain of nearly 5 yen since the buying took place, beefing the yen to its strongest level in about three months.

In a statement, the Finance Ministry said the move “countered excessive volatility and disorderly movements in the Japanese yen in recent months.”

The ministry statement was seen as a signal of Japan’s deep financial firepower. But it also revealed Tokyo’s intention to use a new tool.

“Japan also plans to utilize the Federal Reserve’s Foreign and International Monetary Authorities (FIMA) Repo Facility in the future,” the statement said.

This mechanism allows Japan to borrow U.S. dollars from the Federal Reserve, using its U.S. Treasury bond holdings as collateral rather than selling them.

The announcement is viewed as an attempt to impress upon markets that Japan’s resources for intervention are not easily depleted.

“We are once again making the market aware that such a tool exists,” he said.

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