US Treasury Backs Japan's Yen Intervention with $60 Billion Support

Treasury Secretary Scott Bessent confirmed that the US Treasury has joined Japan's finance authorities in an intervention to prop up the yen. The move aims to stabilize the currency and prevent other economic problems or competitive devaluations of other currencies.

The Japanese government wants to use a COVID-era Federal Reserve backstop, known as the Foreign and International Monetary Authorities Repo Facility, which would allow the Bank of Japan to borrow up to $60 billion to support the yen. Bessent said that this facility was done in 2020 and he thinks it's reasonable for the Fed to consider up-sizing it.

Regarding US sales of euros to buy yen, Bessent stated that he is in close contact with European partners including central banks, saying 'I assured them that it was just a reallocation of our reserves.' He also mentioned that the euro is much closer to an equilibrium price and emphasized that the substantial undervaluation of the yen here is the main concern.

Bessent downplayed any controversy surrounding his 'to do' list from Friday, which included buying $5-10 billion in Japanese yen. He joked about finishing the list with items like having lunch with the Iranian supreme leader and playing tennis with Putin.