U.S. Treasury Secretary Scott Bessent warned currency traders in Texas against betting against joint U.S.-Japan interventions supporting the Japanese yen, citing his information advantage regarding Japanese policymakers’ actions.
Intervention warnings and market positions
“Now I am the house, so when we intervene in the Japanese yen market, I have a pretty good view of what Japan is going to do, what the Bank of Japan is going to do, and what Japanese policymakers are planning. They can bet against me if they want,” Bessent said. “When they say the Treasury Secretary is taking risks, well, for me that’s a dream situation. I have asymmetric information.”
Tadashi Matsukawa, Head of Bond Investment at PineBridge Investments Japan, said Bessent’s statements carry enormous weight. Takumi Naya, Head of FX Trading at Sumitomo Mitsui Banking, said the comments suggest Bessent expects further yen strengthening even at current levels, with USD/JPY potentially falling below 150 within the month.
Policy friction and central bank expectations
Japan spent a record 96.4 billion dollars from the end of July to the end of August to support the currency. On July 31, the United States jointly purchased yen with Japan, marking the first U.S. foreign exchange intervention in the currency in three decades. Bessent has repeatedly indicated a preference for Japanese interest rate hikes over new direct foreign exchange interventions.
The Bank of Japan faces expectations of a 25 basis points rate hike on 18 September. Bessent also expanded the Treasury buyback program in the U.S. government bond market to mitigate rising yields. Yujiro Goto, Chief FX Strategist at Nomura, noted that Bessent’s statement about asymmetric information could be a bluff, adding that the official may not hold more information than markets have priced.
Source: U.S. Treasury Secretary Scott Bessent
