Bessent joins Japan to boost yen, notepad shows $5-10 billion buy order
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The United States joined Japan on Friday in a coordinated effort to reverse the yen's prolonged slide, pushing the currency to 157.40 per dollar, its strongest since early May. The intervention, driven by direct yen purchases, calls to trading banks, and public remarks from US Treasury Secretary Scott Bessent and Japanese Finance Minister Satsuki Katayama, marks the tightest currency coordination between the allies in decades. The rally intensified after Reuters photographed Bessent’s notepad at a Camp David meeting displaying a task to 'Buy Japanese Yen (JPY) $5-10 bil.'
The Intervention
The yen rebound was fueled Friday by a combination of direct yen purchases by Japanese authorities and the Bank of Japan, and calls by officials to banks that trade the currency, according to sources. The Nikkei reported that the Japanese government and BOJ intervened for a second straight day, while the Financial Times said the Federal Reserve Bank of New York sold euros to buy yen on behalf of the US Treasury. At least two major US banks were asked by the New York Fed to check the yen-euro rate during the day, Bloomberg reported, citing two people familiar with the matter.
Bessent's Signal
US Treasury Secretary Scott Bessent, who has deep knowledge of Japan’s markets from his hedge fund career, indicated Thursday in a Fox Business interview that the yen is 'very undervalued' and that 'excess volatility' is unhealthy. On Friday, Reuters photographed a notepad in front of Bessent at a cabinet meeting at Camp David with a 'To Do' list that read: 'Buy Japanese Yen (JPY) $5-10 bil.' Finance Minister Satsuki Katayama’s concurrent verbal support amplified the message, cementing the perception of the tightest US-Japan currency coordination in decades.
Market Impact
The yen advanced more than 1% against both the dollar and the euro Friday, after an intraday jump of over 3% on Thursday when Japan spent around ¥8.45 trillion ($52.8 billion) in what Bloomberg data suggests was the biggest single-day intervention ever by Tokyo. At the close of New York trading, the yen stood at 157.40 per dollar, the strongest since early May and a sharp recovery from the weakest levels since 1986 seen just two days earlier. Michiyoshi Kato, a senior adviser at Sumitomo Mitsui Trust Bank, said 'the market had underestimated the authorities' and that further intervention could push the dollar-yen below 155.
What's Next
Japanese authorities and the US Treasury are expected to continue monitoring currency markets closely, with traders now bracing for potential further intervention. It remains unclear whether the yen’s gains will prove durable, given the currency’s history of fleeting rebounds and the persistent interest rate differential between Japan and the US.
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Bessent joins Japan to boost yen, notepad shows $5-10 billion buy order
