U.S. Treasury Defends Yen Intervention, Warns of Potential Interest Rate Rise

U.S. Treasury Secretary Scott Bessent has defended the decision to intervene in the Japanese yen market, arguing that extreme volatility could push U.S. borrowing costs higher.

The intervention marked a significant shift in U.S. currency policy, with the last time the United States intervened to purchase yen being 1998.

Bessent cited Japan's importance as a major holder of U.S. Treasury securities, noting that disorderly movements in the yen could have consequences well beyond Japan's currency market.

He argued that a sharp selloff in the yen could trigger forced unwinding of financial positions and destabilize global markets.

The Treasury secretary did not disclose the amount of yen purchased by the United States, stating that the operation used existing foreign currency assets held by the Exchange Stabilization Fund rather than extending credit directly to Japan.