September 2026. For any small or mid-sized company overseas that trades with Japan, or is thinking about starting, August was an unusually informative month.
Unlike large corporations, you probably don’t have a currency desk or a procurement division staffed with analysts. That is precisely why what happened in August is good news. You now have solid grounds to remove “predicting the exchange rate” from your decision-making entirely.
Point 1. Two governments spent 15 trillion yen and it barely moved. Your company was never going to call it
Between late July and August, Japanese monetary authorities conducted large-scale yen-buying, dollar-selling intervention. On July 30 the yen surged to 157.80 against the dollar, and in early August it was pushed as far as the 155 range at one point.
What made this round different is that Japan did not act alone. Finance Minister Katayama publicly emphasized close coordination with the US Treasury and stated that further joint intervention was on the table, while US Treasury Secretary Bessent confirmed his willingness to participate. The world’s largest economy and the fourth largest joined forces to stop the yen’s slide.
The scale was extraordinary. According to the foreign exchange intervention figures released at the end of August, the operation from late July through August exceeded 15 trillion yen.
And the result? By the end of August, the dollar was trading in the high 159s to around 160. Essentially back where it started.
Picture two adults pushing a door shut with all their weight. The moment they let go, the door swings slowly back open. They weren’t weak. The force pushing the door open was simply stronger than the force applied from outside.
- The earlier intervention of roughly 11.7 trillion yen, conducted from late April into May, was also fully unwound in under a month
- This round was coordinated between Japan and the US and exceeded 15 trillion yen, about as favorable a setup as intervention ever gets
- The level still returned within a month
If two governments cannot change the direction of something with 15 trillion yen, it is not reasonable to think your company can forecast it. Any business plan built on an exchange rate outlook should be retired this month.
Point 2. The currency isn’t moving. Japan’s price tags are
Here is the part that actually matters. While the exchange rate sits still, domestic prices inside Japan have started to move.
At its policy meeting on July 30 and 31, the Bank of Japan held the policy rate at around 1.0%. It had raised rates only the month before. However, Governor Ueda stated plainly that underlying inflation is approaching 2% and that upside risk cannot be ignored. Markets are now pricing in the possibility of another hike at the October meeting.
And the inflation data has clearly turned upward.
- Japan’s national core CPI for July 2026 came in at 1.8% year on year, accelerating from 1.6% the previous month
- The main driver was energy, which turned positive for the first time in 8 months
- Core-core CPI, excluding fresh food and energy, also accelerated to 1.9%
- Private research institutions forecast core CPI reaching the 2% range by autumn and the 3% range by the end of fiscal 2026
Driven by oil prices tied to Middle East tensions and by the weak yen itself, Japan’s import prices and domestic corporate goods prices have already risen sharply. The increases in raw materials, packaging, and freight that Japanese firms have been absorbing internally are finally reaching final prices.
The structure is this. The discount rate, meaning the weak yen, did not move even against 15 trillion yen of coordinated intervention. But the list price that discount applies to is going to rise over the coming year.
If the discount stays constant and the list price rises, what you pay goes up. You do not need to predict the currency. That arithmetic alone is reason enough to move now.
Point 3. Buying and selling are opposite positions, and smaller firms often blur them
“Trading with Japan” describes two entirely different situations, and today’s exchange rate means opposite things depending on which one you are in.
If you are buying from Japan, this is one of the most favorable windows in decades. But as Point 2 showed, that window is being eaten away from the inside by rising yen-denominated prices. If you are going to move, move now.
If you are selling into Japan, you are facing a headwind. Your home-currency price looks like it keeps climbing to a Japanese buyer. Discounting to close that gap only erases your own margin.
Japanese buyers do not switch suppliers because someone is cheaper. Stable supply, consistent quality, and a contact who responds quickly. Only when all three are present does switching away from an incumbent reach the discussion table.
The practical fix is simple. Stop opening meetings with a price list, and lead with your supply capacity and quality control documentation instead. Changing nothing but the order changes the response.
Point 4. Four things to settle this month, at the contract level
Enough macro. Here is what to change in your paperwork. You do not need a dedicated department for any of these. An owner can decide all four alone.
1. Choose your invoicing currency deliberately. This is, in plain terms, an agreement about which party carries the exchange rate risk. Yen invoicing favors the buyer while the yen is weak, but produces losses the moment it strengthens. Home-currency invoicing gives you predictable costs, but your Japanese supplier will price the risk they absorb into the unit price. Letting it be decided simply because the other side proposed it is the worst of the available options.
2. Shorten your quotation validity period. In a market that can move 5 yen in a matter of days, a 30-day validity period is effectively a signed consent form for gambling. Shorten it to somewhere between 7 and 14 days and add a clause that reopens pricing if the rate moves beyond an agreed band. Many Japanese firms are unfamiliar with this type of clause, so explain the mechanism carefully before signing.
3. Do not reject Japanese price increase requests out of hand. Japanese small and mid-sized firms are currently squeezed between rising imported input costs and rising wages. In many cases the request is not a negotiating tactic but a survival issue. Refuse flatly and you will quietly drop down their allocation priority list. Accepting the increase while asking for larger order lots or shorter payment terms in return usually costs less across a full year.
4. Extend your contract term. Every repeat spot purchase exposes you to the rising yen price all over again. Lock price and volume at today’s level for as long a period as your supplier will accept.
Point 5. In an unreadable world, Japan offers something that never appears on the invoice
Looking back at August, a single news report on Middle East tensions moved the dollar-yen rate by more than a full yen, and Federal Reserve Chair Warsh’s remarks at Jackson Hole reversed the trend outright. Oil prices, US interest rates, and the exchange rate are all changing direction within days.
For a smaller company with limited balance sheet cushion, the biggest risk in this environment is not price. It is whether the promised quality arrives on the promised date. A delivery delay that a large corporation absorbs with inventory and cash reserves becomes an immediate credibility problem for a small firm.
On this single dimension, Japan offers a level of stability that is genuinely unusual worldwide.
- Delivery reliability: in Japanese business culture, missing a delivery date is close to unforgivable
- Legal and contractual integrity: counterfeiting, IP infringement, and unilateral contract changes are practically non-issues
- Lower barriers than before: cross-border e-commerce, English-language support, and online negotiation tools have spread to Japanese SMEs
Let me put both sides on the table honestly.
- The upside: quality, delivery reliability, and legal compliance come included in the price as a kind of invisible insurance policy
- The trade-off: Japan is a poor fit for high-volume, rock-bottom-price negotiation, and lead times require a planning buffer
The cost of buying cheaply and receiving nothing can never be recovered through a price difference. The more unpredictable the environment, the more that invisible insurance is worth.
Conclusion. Don’t bet on the currency. That is this month’s only rational strategy
August demonstrated that attempts to steer the exchange rate through policy do not work, even at a scale of 15 trillion yen with US cooperation. It also confirmed that domestic prices in Japan have entered a clear upward phase.
Nobody can say when or in which direction the currency will move next. What is already settled fact is that yen-denominated prices inside Japan are going to rise.
There is no need to chase what cannot be read. Lock in mid-to-long-term supply agreements with strong Japanese suppliers at today’s price level, and fix price and volume in advance. Secure what you already know is going up, before it goes up. That is the whole of it.
For a company without a currency desk, this is not a disadvantage. Having the decision narrowed to a single variable works in your favor. While larger competitors assign staff to forecasting the yen, you can simply sign the contract first.