US Treasury Warns Yen Volatility Risks Global Market Chaos

U.S. Treasury Secretary Scott Bessent has sounded the alarm over potential risks to global financial markets due to yen volatility.

In a letter to Senator Elizabeth Warren, dated August 27th, Bessent warned that disorderly declines in the Japanese currency could trigger forced position unwinds with far-reaching consequences for American households and businesses.

The warning comes as the yen has continued to struggle despite market expectations of near-term rate hikes by the Bank of Japan. In fact, the currency briefly dipped below 160 per dollar on Friday, a level widely monitored by market participants as a key trigger for potential central bank intervention.

Bessent defended the joint currency intervention with Tokyo last month, citing the historical role of the Exchange Stabilization Fund in international markets. He noted that the Treasury used the fund to support Argentina's peso market and establish a $20 billion currency swap facility to stabilize the currency last year.