Bessent calls US yen intervention "nominal," defends trade

Investing.com -- Treasury Secretary Scott Bessent said Tuesday that the US deployed only a nominal amount in its coordinated intervention to support Japan's currency. He defended the operation as serving American interests during testimony at the House Financial Services Committee.

Bessent said a stronger yen benefits American exports and means the Japanese government will not need to sell US assets to finance foreign currency intervention. The Treasury joined Japan in buying yen on July 31 after the Japanese currency fell to its lowest level against the dollar in four decades.

Treasury watchers have calculated that the department used notably less than $1 billion in the yen intervention. Japan spent a record $96.4 billion from late July to late August. Tokyo has deployed record amounts in its own yen purchases through transactions that involved selling dollars and likely US Treasuries. Japan is the largest foreign holder of US government securities.

Bessent said that for a nominal amount, the Treasury was able to signal support for Japanese policy. He added that the Treasury has made tens of millions of dollars on the yen operation, though that was not the goal.

The Treasury Secretary has suggested in recent weeks that he wants to see the Bank of Japan raising interest rates to support the yen. The BOJ meets to set policy later this week.

At a Southern Methodist University event in Texas last week, Bessent said he has insight into what the Bank of Japan and Japanese policymakers will do. "And you can bet against me if you want," he said.

In a letter responding to questions from Democratic Senator Elizabeth Warren last month, Bessent wrote that disorderly yen markets can trigger forced unwinds, which could destabilize global markets and raise borrowing costs for American families and businesses.

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