US Treasury Secretary Warns Disorderly Yen Swings Could Destabilize Global Markets
2 sources across 2 countries · Brazil · United Kingdom
Who reported this
- Folha de S.Paulo
- Reuters
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- Centre-left
- Centre
- Centre-right
- Right
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US Treasury Secretary Scott Bessent stated that disorderly fluctuations of the Japanese yen could trigger forced liquidations of positions. According to Bessent, such volatility risks destabilizing global markets and could increase borrowing costs for American businesses and families. These comments were made in a letter dated August 27 and published on X on Friday, August 28, in response to a request from Democratic Senator Elizabeth Warren for an explanation regarding a joint currency intervention by Washington and Tokyo last month.
On July 31, the United States and Japan conducted a rare joint intervention to buy yen to prevent a wave of selling of the currency and Japanese government bonds from spreading globally. Bessent explained that the Treasury used its Exchange Stabilization Fund (ESF) to swap foreign currency assets for yen. He compared this action to the Treasury's use of the ESF to support the Argentine peso during a period of severe short term illiquidity to prevent a broader regional crisis. Bessent defended the decision by stating that the best managed crisis is one that never happens.
The yen has recently shown volatility, weakening toward 160 per dollar after previously rising to 155.20 following the intervention. It briefly fell below the 160 level on Friday after comments from Federal Reserve Chair Kevin Warsh raised expectations for a short term interest rate increase in the United States.
How each side framed it
- Centre
- The outlets framed the event as a matter of global financial stability and a response to legislative inquiry.
Sources
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