Bessent calls yen moves ‘contained’ ahead of G20 talks

The Japanese yen slipped back below the closely watched 160-per-dollar level on Friday, erasing more than half the gains from last month's record intervention, even as U.S. Treasury Secretary Scott Bessent sought to reassure markets that the currency's decline remained orderly.

In an interview with Reuters on Sunday ahead of the G20 finance ministers' gathering in Asheville, North Carolina, Bessent said recent yen moves were "pretty well contained" and did not constitute the kind of disorderly trading that prompted a rare joint U.S.-Japan intervention on July 31.marketscreener

Record Intervention Fading

Japan's Ministry of Finance disclosed Friday that it spent a record 15.4 trillion yen ($96 billion) on currency operations between July 30 and August 26, the largest monthly intervention on record. The campaign, which included the first joint U.S.-Japan yen-buying operation since 1998, initially drove the currency from near a 40-year low of roughly 164 per dollar to 155.20 by early August. But the yen has since drifted steadily weaker, settling around 159.50 before breaking below 160 on Friday after Federal Reserve Chair Kevin Warsh's comments revived expectations of a near-term U.S. rate hike.nationthailand+2

Bessent told Reuters he expected Bank of Japan Governor Kazuo Ueda to "do the right thing" on monetary policy, adding that Japan had likely reached "the end of Abenomics". Markets currently price a 65% probability of a BOJ rate increase at its September meeting.marketscreener+1

European Tensions Over Euro Sales

The intervention has also generated friction with Europe. The U.S. Treasury sold euros from its Exchange Stabilization Fund to buy yen during the July 31 operation, a move that blindsided the European Central Bank, according to the Financial Times London Stock Exchange Group plc. Some ECB officials viewed Washington's decision to use euros rather than dollars as a breach of longstanding conventions. The episode has raised questions about European sovereignty over its currency at a moment when Bessent is seeking cooperation from G20 partners on trade imbalances and growth.reuters+2

G20 Test Ahead

The G20 Finance Ministers and Central Bank Governors meeting, which Bessent is hosting, begins Monday and runs through September 1. In a letter posted to his X account on August 28 responding to Senator Elizabeth Warren's demand for an explanation, Bessent defended the intervention, writing that "the best-managed crisis is the one that never happens". He warned that disorderly yen moves could trigger "forced unwinds" of leveraged positions, destabilizing global markets and raising U.S. borrowing costs.theedgemalaysia+2

The 160-per-dollar threshold is widely seen as a trigger for further Japanese intervention, setting up a tense backdrop for the Asheville talks.nationthailand