Treasury Secretary Scott Bessent Defends Joint Yen Intervention

U.S. Treasury Secretary Scott Bessent defended a joint currency intervention with Japan conducted on July 31, arguing the move was necessary to prevent global market instability. The operation, the first coordinated effort between the two nations to strengthen the yen since 1998, occurred as the yen hit a 40-year low near 164 per dollar. Bessent stated the Treasury used the Exchange Stabilization Fund to exchange foreign-currency assets, specifically selling euros to purchase yen, to avoid forced unwinds of positions that could increase borrowing costs for U.S. households and businesses.

The intervention followed a record 15.4 trillion yen expenditure by Japan to support its currency between July 30 and August 26. While the yen initially surged to 155.20 following the action, it has since weakened back toward 160 per dollar. Bessent compared the strategy to a previous $20 billion swap line used to stabilize Argentina's peso market.

The action sparked a public dispute on X between Bessent and Senator Elizabeth Warren, who had sent a letter on August 13 seeking details on the transaction. Bessent accused Warren of a remedial error and a lack of understanding regarding foreign exchange markets. Warren responded by criticizing Bessent's performance and the state of the economy under President Trump, claiming the effort to prop up the foreign currency failed.