Bessent calls yen ‘very undervalued,’ backs Japan intervention

U.S. Treasury Secretary Scott Bessent said on Thursday that the Japanese yen appears "very undervalued," remarks that amount to an endorsement of Japan's apparent intervention in currency markets earlier in the day. The comments, made during a Fox Business ↘ 0.63% interview, mark one of the strongest public statements by a U.S. official in support of yen strengthening.

Bessent's Remarks

In the interview, Bessent told Fox Business reporter Edward Lawrence that "the Japanese yen seems very undervalued to me. The currency is very cheap." He added that "the currency markets tend to overshoot. And I believe the Japanese yen has substantially overshot what would be called an equilibrium price."x

Bessent also said the U.S. "believes excess volatility in the Yen isn't healthy," and expressed confidence that market participants would eventually recognize the yen's undervaluation. He said he was not concerned about the yen strengthening against the dollar, pointing to Japan's strong economic fundamentals and popular prime minister.x

Reuters reported that Bessent said Japan may have intervened to push up the "undervalued" yen.tradingview

Context of Intervention

The USD/JPY pair fell sharply on July 30, declining more than 1.4% on the day amid speculation of Japanese intervention. The yen had been trading near 40-year lows against the dollar in recent weeks, touching levels above 163 earlier in the week.tradingkey+2

Japan has a history of intervening to support its currency. Between late April and early May, Tokyo spent a record 11.7 trillion yen in foreign exchange markets. Despite that spending, the yen's gains proved temporary, with the currency sliding back toward pre-intervention levels by June.reuters+1

Broader Policy Alignment

Bessent's comments follow weeks of increasingly coordinated U.S.-Japan messaging on currencies. On July 23, the U.S. Treasury Department warned that excess yen volatility was "undesirable" and called for further rate hikes by the Bank of Japan. In June, Japanese Finance Minister Satsuki Katayama said she and Bessent had agreed to take "bold" steps on currencies if needed.bloomberg+1

The Bank of Japan raised its policy rate to 1% in June, the highest level since 1995, as part of its ongoing monetary normalization. The BOJ's July 30–31 meeting was widely expected to address further policy tightening.polymarket+2

Bessent's explicit characterization of the yen as undervalued removes a layer of ambiguity that has long surrounded U.S. currency diplomacy and could embolden Japanese authorities to act more aggressively in defending the yen.