Bessent Warns Disorderly Yen Swings Could Shake Global Financial Markets

US Treasury Secretary Scott Bessent said sharp, disorderly movements in the Japanese yen could force sudden position unwinds that destabilize global markets and push up borrowing costs for American households and businesses.

Treasury Defends July Currency Intervention

Bessent made the remarks in a letter responding to Senator Elizabeth Warren’s request for details on last month’s joint currency intervention between Washington and Tokyo. He explained that the Treasury used its Exchange Stabilization Fund to exchange foreign-currency assets for yen, drawing a comparison to how the same fund was previously used to stabilize Argentina during a liquidity crisis.

Yen Weakens Again Despite Rate Hike Expectations

The yen has recently drifted back toward 160 per dollar after briefly strengthening following the intervention, even as markets anticipate a possible Bank of Japan rate increase. The currency dipped below that closely watched threshold Friday after Federal Reserve Chair Kevin Warsh’s comments boosted expectations of a near-term US rate hike.

Treasury Stands By Preventive Approach

Bessent argued that early intervention helps avoid larger financial disruptions, stating that the most effective crisis management is one that prevents problems before they escalate.