Treasury Secretary Scott Bessent Describes Recent Yen Movements as Contained, Not Disorderly

US Treasury Secretary Scott Bessent said on Sunday that recent movements in the Japanese yen have been ‘pretty well contained,’ indicating that the currency’s recent weakness does not resemble the disorderly shifts that prompted a rare joint Japan‑U.S. intervention last month, according to Reuters.

Regarding China, Bessent noted that Washington will engage in ‘very robust’ discussions aimed at preventing advanced AI models from falling into the hands of non‑state actors.

Key quotes

Japan likely reached end of Abenomics reflation program. 

Yen fluctuations are ‘pretty well contained’ when questioned about disorderly moves. 

Will meet BoJ’s Ueda on sidelines of G20 finance leaders’ summit, praises Ueda as an underrated market-savvy economist. 

With Japan Prime Minister’s support, BoJ Governor Ueda will act appropriately on monetary policy. 

Under PM Takaichi, government intervenes less in economic policy, should ‘sit back and enjoy’ success of Abenomics and let it run. 

He won’t advise on whether BoJ should consider back-to-back rate increases. 

Will urge G20 nations at finance meeting to reassess trade terms with China to lower global imbalances. 

Tougher trade barriers on Chinese goods would encourage Beijing to shift economy from exports to domestic demand. 

To hold ‘very robust’ talks with China, focusing on stopping powerful models getting into non-state actors’ hands. 

US direct trade position with China improving, will pursue tariff cuts on $30 billion in non-strategic goods each side. 

World can’t accept China with ongoing $1.2 trillion trade surplus – source interview. 

Unclear if he will meet Chinese vice premier He Lifeng in person before Trump-Xi summit in late September. 

Market reaction

As of this writing, the USD/JPY pair is up 0.02% for the day, trading at 160.15, while the AUD/USD pair is down 0.06% at 0.7160.

Bank of Japan FAQs

The Bank of Japan (BoJ) serves as Japan’s central bank, responsible for setting monetary policy. Its mission includes issuing banknotes and managing currency and monetary affairs to maintain price stability, which translates to an inflation target of approximately 2%.

Starting in 2013, the BoJ adopted an ultra‑loose monetary stance to spur economic activity and lift inflation amid persistently low price growth. Its approach relied on Quantitative and Qualitative Easing (QQE)—essentially creating money to purchase government and corporate bonds, thereby injecting liquidity. In 2016 the bank intensified this policy by introducing negative interest rates and later directly managing the yield on its 10‑year government bonds. By March 2024, the BoJ raised interest rates, marking a retreat from its ultra‑loose posture.

The extensive stimulus pushed the yen lower versus its major peers, a divergence that grew sharper in 2022 and 2023 as the BoJ kept rates low while other major central banks hiked rates to combat high inflation. This widening interest‑rate gap weighed on the yen’s value. The trend began to ease in 2024 when the BoJ moved away from its ultra‑loose policy.

A weaker yen, combined with surging global energy prices, pushed Japanese inflation above the BoJ’s 2% goal. Anticipated wage increases in Japan—another key driver of price growth—also contributed to the uptick.

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