Bessent Warns Yen Volatility Risks Global Market Instability
US Treasury Secretary Scott Bessent has warned of potential risks to global financial markets if disorderly yen volatility continues. In an August 27 letter to Democratic Senator Elizabeth Warren, Bessent noted that forced position unwinds could destabilize international markets and push up borrowing costs for American households and businesses.
The warning came as the yen faced renewed downward pressure despite market expectations of near-term rate hikes by the Bank of Japan. Bessent defended the joint currency intervention with Tokyo last month, saying it was necessary to counter disorderly declines in the Japanese currency.
He compared the intervention to previous Treasury stabilization efforts, including a $20 billion currency swap facility established last year to support Argentina's peso market. The Exchange Stabilization Fund (ESF) serves as an emergency reserve managed directly by the US Treasury to maintain stability across foreign-exchange and domestic financial markets.