Scott Bessent Confirms Joint U.S.-Japan Currency Intervention to Mitigate Dollar-Yen Volatility

Treasury Secretary Scott Bessent confirmed that the administration joined Japan in its first joint yen-buying intervention since 1998. This move aims to stabilize the yen, which reached a 40-year low against the dollar in late July. The administration announced the joint intervention to limit potential Japanese selling of dollar--based assets, particularly Treasury bonds, which could negatively impact the U.S. economy. While the dollar remains a dominant global currency, its strength can exacerbate inflation pressures for other nations. For Japan, a weak yen has intensified inflation sentiment among households. The administration's strategy involves selling euros to buy yen, thereby avoiding a direct weakening of the dollar. By coordinating with Japan, the U.S. government seeks to prevent contagion from overseas currency volatility back to domestic markets. This proactive approach suggests that the administration is increasingly concerned about the dollar becoming a domestic economic burden rather than just a other countries' problem.

Sources

• Council on Foreign Relations
  The Dollar Boomerang Threat: Washington’s Motivations to Support the Yen