Bessent Warns Weak Yen Triggers Asian Currency Instability

Treasury Secretary Scott Bessent has warned that Japan's inflation problem is partly due to the yen's weakness, which drives up energy costs. He said a stable yen is crucial not only for the US but also for the entire Asian region.

Bessent emphasized that the level of the yen could trigger other problems or competitive devaluations, which would be unhealthy. Japan intervened in the currency market with the US, and the yen has since surged to around 157.54 per dollar, although it stalled on Tuesday.

The Treasury chief pointed out that if the yen were to weaken substantially, other Asian currencies like the Korean won and Chinese RMB would likely follow suit. He said Japan's Prime Minister Sanae Takaichi is moving towards budget discipline, including a primary surplus.

Bessent stated that currency intervention can give market signals but ultimately requires policy to turn it around. He expressed confidence in Governor Kazuo Ueda's ability to take the necessary steps to stabilize the yen.