Treasury Secretary Bessent Warns That Turbulent Yen Fluctuations May Disrupt Global Markets

Washington — Treasury Secretary Scott Bessent warned that volatile movements in the yen could prompt forced position unwinds, threatening global market stability and driving up borrowing costs for U.S. households and businesses.

He made these remarks in a letter dated August 27, which he subsequently posted on his X account, in response to a request from Democratic Senator Elizabeth Warren for an explanation of the United States’ coordinated currency intervention with Tokyo earlier this month.

The post coincided with the yen’s renewed weakening against the dollar, even as market expectations persisted that the Bank of Japan might raise interest rates soon.

On July 31, Japan and the United States executed a rare joint yen‑buying intervention, signaling their resolve to avert a yen and Japanese government bond sell‑off that could spill over into global markets.

Although the yen has rebounded from a 40‑year low near ¥164 per dollar earlier this month, it has drifted back toward ¥160 after briefly spiking to ¥155.20 following the intervention.

The currency slipped briefly below the ¥160 per‑dollar threshold last Friday, a level many view as a trigger for intervention, after Federal Reserve official Kevin Warsh revived expectations of an imminent U.S. rate hike.

In the letter, Bessent explained that the Treasury executed the intervention by swapping foreign‑currency assets held in its Exchange Stabilisation Fund (ESF) for yen.

“The same principle guided the Treasury’s actions in Argentina, where the Exchange Stabilisation Fund was deployed to shore up the peso during a period of acute, short‑term liquidity strain and to prevent the situation from escalating into a broader regional crisis,” he added.

“The best‑managed crisis is the one that never occurs,” Bessent said, defending Washington’s decision to support Tokyo’s efforts to curb disorderly yen declines.

The ESF is an emergency reserve managed by the U.S. Treasury to stabilize foreign‑exchange and domestic financial markets.

The Treasury employed the ESF last year to support Argentina’s peso market and to provide a $20 billion currency swap line intended to stabilize the currency.

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