WASHINGTON — U.S. Treasury Secretary Scott Bessent has warned that disorderly movements in the Japanese yen could force investors to rapidly unwind large financial positions, potentially destabilizing international markets and increasing borrowing costs.Bessent made the comments in an August 27 letter defending the coordinated intervention undertaken by the United States and Japan on July 31. The two countries entered currency markets to support the yen after it weakened to a 40-year low of nearly 164 per U.S. dollar.The intervention initially strengthened the currency to approximately 155.20 yen per dollar. It later weakened again toward the 160 level, keeping the possibility of additional intervention under discussion.The American operation used foreign-currency assets held by the Treasury’s Exchange Stabilization Fund. Bessent argued that preventive action was necessary because abrupt changes in the yen could affect highly leveraged positions across several financial markets.Why it matters: The yen is widely used in global borrowing and investment strategies. A rapid reversal could affect bonds, equities and financing costs in Japan, the United States and other economies.
