Bessent Warns of Global Market Risks from Disorderly Yen Moves

U.S. Treasury Secretary Scott Bessent has warned that disorderly movements in the yen could destabilize global markets and increase borrowing costs for U.S. households and businesses.

In a letter to Democratic Senator Elizabeth Warren, dated August 27, Bessent explained that the joint currency intervention between Japan and the United States on July 31 was aimed at preventing a selloff in the yen and Japanese government bonds from spilling over into global markets.

The intervention, which saw Washington exchanging foreign-currency assets held in its Exchange Stabilization Fund (ESF) for yen, has had some success in stabilizing the currency. However, the yen has weakened back towards 160 against the dollar after surging to 155.20 shortly after the intervention.

Bessent defended the joint intervention, saying that 'the best-managed crisis is the one that never happens.' He noted that the ESF was also used last year to help support Argentina's peso market and provide a $20 billion currency swap line aimed at stabilizing the currency.