US Treasury Backs Japan's Currency Intervention Efforts

US Treasury Secretary Scott Bessent believes that Japan's inflation will ease as energy prices stabilize and the yen's weakness fades. This follows a coordinated currency intervention by the US and Japan to support the yen, which has recovered from multi-decade lows to around 157 per dollar.

The joint effort has helped stabilize global currency markets, particularly in Asia where won and yuan volatility had risen. A stable yen reduces the risk of sudden, large-scale selling of US Treasuries by Japan, which helps cap upward pressure on long-term yields and provides a more orderly backdrop for emerging markets.

Japan's core consumer price index, which excludes fresh food, rose 1.6% year-on-year in June, staying below the central bank's 2% target. Bessent views Japan's inflation uptick as a transitory product of import costs driven by energy shocks and yen depreciation.