Bessent Suggests Japanese Rate Hike on Horizon Amid Yen Weakness

US Treasury Secretary Scott Bessent spoke at the G20 Finance Ministers Meeting in Asheville, South Carolina, hinting that Japan will take action to strengthen its yen. He stated that he believes the Japanese government and Bank of Japan will do something that leads to a stronger yen.

Bessent was asked about the effectiveness of US intervention in the dollar-yen exchange market alongside the Japanese government, and replied that 'all we can do is send signals.' When pressed on whether this implied a rate hike by the Bank of Japan, he said 'market participants have already priced it in.'

This suggests that amidst renewed weakness in the yen, the Bank of Japan will respond with a rate hike next month. Reuters noted that the yen strengthened against the dollar, reinforcing market expectations for a September interest rate hike.