US Treasury Secretary Scott Bessent Warns Traders Against Betting Against the Yen

US Treasury Secretary Scott Bessent warned financial traders not to bet against the Japanese yen, stating that he now holds the advantage. Speaking at an event at Southern Methodist University on Tuesday, Bessent claimed to have asymmetric information regarding the actions of the Bank of Japan and Japanese policymakers. He used a gambling metaphor, stating, "Now, I am the house," and challenged traders to bet against him if they wished.

These remarks follow a joint intervention by the United States and Japan in late July to support the yen, which had fallen to a 40 year low. Analysts suggest the US Treasury sold euros for yen to prevent Japan from having to sell US government bonds to support its own currency. This move reportedly surprised the European Central Bank. Mansoor Mohi-uddin, chief economist at the Bank of Singapore, noted that while such interventions may or may not succeed, they are increasing market volatility and uncertainty.

In a separate move to control rising government financing costs, Bessent announced an expansion of repurchase operations in the US Treasury bond market. He stated in mid August that the Treasury would at least double its purchases of long term public bonds to 4 billion dollars. The initial volume for this new regime is expected to be announced on Wednesday.

The yen has recovered since the joint intervention and reached approximately 153.3 to 153.59 yen per US dollar on Wednesday. Lee Hardman, a senior currency analyst at MUFG, stated that Bessent's comments reinforce expectations that Japan has agreed to adjust internal policies to further support the currency.