After Leaked Buy Yen Note, Bessent Explains U.s. Move To Save Japanese Currency

What Happened

A photographer at Camp David caught Treasury Secretary Scott Bessent’s notepad. It read “Buy Japanese Yen (JPY) $5-10 bil.”

Why the US Bought Yen for the First Time Since 1998

Japan’s Finance Ministry confirmed the move on Monday. Minister Satsuki Katayama said Tokyo bought yen “in coordination with the U.S. Department of the Treasury” on Friday. She added that Japan “will not hesitate to conduct further joint intervention.”

Market Context

On Tuesday he explained the plan. Bessent told CNBC the US bought yen because the currency had fallen too far. The market is already pushing back.

The yen had sunk to its weakest level since 1986. So Japan and the US stepped in and bought it, which pushes the price up.

“This is more than just a market intervention… through our conversations with them, we believe that they are going to continue to put the right policies in place that will lead the yen to get back to more of a normal equilibrium price,” Bessent told CNBC.

“I think here we can give market signals. But at the end of the day, it’s going to be policy and fundamentals. And the US decided to join because we are very optimistic on their policy path.”

Why It Matters

The plan was not new. Both governments signed a statement last September agreeing to act together if the yen moved in a disorderly way. The notepad leaked the timing, not the policy.

What is new is the size. The last time Washington bought yen was June 17, 1998. Back then it spent just $833 million, according to the New York Fed. Bessent’s note points to six to 12 times more.

Details

Nobody knows yet what Japan spent. Estimates near $59 billion are guesses based on central bank cash flows. Tokyo publishes the real number on August 31.

Bessent was relaxed about the leak itself.

“I just wanted to make sure that all the reporters looking over my shoulder also knew the symbol. JP for the Japanese yen,” he said in the interview.

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He was firmer on the reason. This was not a one-day rescue, he said, but part of a longer plan with Tokyo.

Bessent also has a history lesson. He blames part of the 1997 Asian Financial Crisis on a yen that fell too far.

Back then, weakness in Japan dragged neighboring currencies down. South Korea’s won, he said, is already jumpy today.

“…part of it was triggered by an overly weak yen. So I think a stable yen is not only important for the U.S. but it’s very important for the entire region, because if the yen were to weaken substantially, then the other currencies would follow it.”

Bessent Says Policy Matters More Than the Yen Intervention

Here is his key point. Buying a currency sends a message. Fixing a currency takes interest rates and budgets.

The 1998 record backs him up, and then goes further. That day the dollar dropped from 142.21 yen to 136.51. Two weeks later it was back at 138.88. Roughly 40% of the gain was gone.

The yen finally turned four months later. No government bought a single yen. The dollar fell from 133.90 to 120.55 on October 7, 1998, then to 111.58 the next morning. Hedge funds were dumping dollars to cut their losses.

The dollar lost 17.4% against the yen that quarter. The New York Fed confirmed nobody intervened at all.

So the fix Bessent wants depends on Japan raising rates. The Bank of Japan (BOJ) held at 1% on July 31. One of nine members voted for a hike.

The US is moving the other way. The Federal Reserve held rates at 3.50% to 3.75% on July 29, and three officials wanted them higher. That leaves a gap of about 2.6 points.