Bessent Sounds Alarm Over Weak Yen's Regional Impact

Treasury Secretary Scott Bessent has expressed concerns about the yen's weakness and its potential impact on Japan's inflation problem. The yen has dropped to a four-decade low against the US dollar, with the current exchange rate trading around 157.54 per USD. This decline is attributed to Japan's weak currency, which drives up energy costs for Japanese consumers.

Bessent stated that the weakness of the yen could trigger competitive devaluations among Asian currencies, leading to broader depreciation. He emphasized the importance of a stable yen not only for the US but also for the entire region of Asia. The Treasury chief noted that Japan's inflation problem is partly due to the pass-through effect of the weak yen.

Bessent reiterated US support for efforts to stabilize the situation and said that the country is in close contact with Tokyo to address the issue. He added that stabilizing the yen would require policy to follow up on the intervention, and he expressed confidence that Japan's Prime Minister Sanae Takaichi's government is moving towards budget discipline.