US Bails Out Yen, Citing Self-Interest and Global Economic Stability

US Treasury Secretary Scott Bessent has been making headlines for his notepad, which was caught on camera at a recent Cabinet meeting. The note on his pad read 'Buy Japanese Yen (JPY) $5-10 bil.' This move is an attempt to support the struggling yen, which hit a 40-year low. President Donald Trump acknowledged that Japan asked for help and that the US is always there for its ally.

The action was not entirely altruistic, however. The weakening of the yen makes Japanese exports cheaper in the US, widening the trade deficit. A stubbornly low yen also has an impact on US interest rates, as Japan might sell US Treasurys it holds to finance a currency rescue. This could jolt the bond market and push up interest rates.

Joseph Foudy, a clinical professor of economics at New York University's Stern School of Business, says that the intervention has injected caution into speculators who were betting against the yen but is unlikely to be enough to keep this from happening again. He cites two key motivations for the US action: self-interest and concern over the global financial system.