Bessent’s decision to describe the yen’s recent slide as well contained is a meaningful signal in itself, since it lowers the near-term odds of a repeat of the rare joint US-Japan intervention carried out last month when the currency hit 40-year lows. By declining to push the BOJ toward consecutive rate hikes and instead deferring to Ueda’s judgment, Bessent leaves the pace of Japanese tightening squarely in Tokyo’s hands, which markets may read as reducing the chance of an aggressive near-term move. His comment that Japan has likely reached the end of Abenomics, together with his praise for reduced government intervention in economic policy under the current administration, signals continued US comfort with Tokyo’s gradual policy normalisation rather than a push for faster yen support. With no fresh intervention signalled and the BOJ left to set its own pace, USD/JPY is likely to remain sensitive to incoming Japanese data and rhetoric out of the G20 gathering rather than to any new US pressure.
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Bessent has signalled Washington sees no need for fresh yen intervention and is content to let Ueda set his own pace on rates.
Summary:
- Treasury Secretary Scott Bessent said in a Reuters interview that recent yen moves are pretty well contained, rejecting the idea they are disorderly.
- He said he expects BOJ Governor Kazuo Ueda to do the right thing on monetary policy with Prime Minister Sanae Takaichi’s backing.
- Bessent declined to say whether the BOJ should consider consecutive rate hikes, saying he won’t tell the central bank what to do.
- He said Japan has probably reached the end of Abenomics, describing it as a reflationary program.
- Bessent said reduced government intervention in economic policy under PM Takaichi means Japan should let the gains from Abenomics continue to play out.
- He plans to meet Ueda on the sidelines of the G20 finance leaders’ gathering in Asheville, North Carolina, which begins Monday, and praised Ueda as an underrated, savvy market operator he has known for 15 years.
US Treasury Secretary Scott Bessent said on Sunday that recent declines in the Japanese yen remain well contained, pushing back on suggestions the currency’s renewed weakness resembles the disorderly moves that prompted a rare joint US-Japan intervention last month. In an interview with Reuters, Bessent said he sees no need to characterise the yen’s current trajectory as disorderly, a marked contrast to the language both governments used in August when the currency touched its weakest level against the dollar since 1986.
That earlier episode saw Japan and the US carry out their first coordinated currency intervention since 1998, buying yen after it slid to roughly 163.73 per dollar before rebounding following the announcement. Japanese officials said at the time the operation targeted excessive volatility, while Bessent had said a stable yen mattered not just for the US but for the wider region. His latest comments suggest Washington does not currently see conditions warranting a repeat of that action.
On the question of Japanese monetary policy, Bessent said he expects Bank of Japan Governor Kazuo Ueda to make the right calls with the backing of Prime Minister Sanae Takaichi, declining to say whether the central bank should pursue consecutive interest rate hikes to support the currency. He described Ueda, whom he has known for 15 years, as a highly capable and underrated market operator, and said the two will meet on the sidelines of the G20 finance leaders’ gathering opening Monday in Asheville, North Carolina.
Bessent also offered a broader assessment of Japanese economic policy, saying the country has likely reached the end of Abenomics, the reflationary program associated with former prime minister Shinzo Abe. He suggested that with less government intervention in economic policy under Takaichi, Japan should allow the gains already achieved under that program to continue rather than pursue further active stimulus. The remarks come as markets watch for any signal from the G20 meeting on how Washington and Tokyo intend to coordinate on currency and monetary policy in the months ahead.
This article was written by Eamonn Sheridan at investinglive.com.