US Treasury Secretary Scott Bessent initiated a significant intervention at the start of the month, aiming to purchase between $5 billion and $10 billion in Japanese yen. This move was followed by an announcement to at least double the size of buybacks for longer-dated securities and to expand the "fiscal consolidation" of buying back costlier debt. Analysts on Wall Street have expressed confusion regarding these actions, particularly given that the yen has mostly returned to its year-start levels after a June slump.
Bessent's intervention in the yen market marked the first coordinated effort between the US and Japan to strengthen the yen since 1998. Japan itself spent approximately $96.5 billion (15.4 trillion yen) between July 30 and August 26 in its own efforts to support its currency. This aggressive stance by Bessent has led him to be characterized as the most interventionist Treasury Secretary in decades, willing to stake his credibility to manage US borrowing costs and support allies.
The Treasury Secretary has faced criticism, notably from Senator Elizabeth Warren, regarding the yen intervention. Warren questioned the details of the purchase, including its size, execution rate, and current value, none of which Bessent disclosed in his response. Bessent defended the intervention as crucial for protecting US economic interests and preventing global market destabilization, stating that the Treasury exchanged existing foreign-currency assets for yen without new congressional appropriations or extending credit to Japan. His notepad had previously indicated a plan to "Buy Japanese Yen (JPY) $5-10 bil."
