Bessent Says Yen Moves Contained as BOJ Rate Decision Looms

U.S. Treasury Secretary Scott Bessent said the Japanese yen’s latest weakness remains “pretty well contained,” signaling that Washington does not currently view the currency’s decline as disorderly enough to warrant another joint U.S.-Japan intervention.

The yen weakened beyond 160 per U.S. dollar on Friday, a level closely watched by currency traders because it could increase the risk of intervention. Japan and the United States jointly bought yen on July 31 after sharp moves in the currency and Japanese government bond markets raised concerns about broader financial instability.

Asked by Reuters on Sunday whether the yen was again experiencing disorderly trading, Bessent said it was not. His comments suggest the latest USD/JPY moves have yet to trigger the same level of concern that prompted last month’s coordinated action.

Bessent also expressed confidence in Bank of Japan Governor Kazuo Ueda ahead of the BOJ’s September 17-18 monetary policy meeting. While declining to recommend more aggressive interest rate hikes, he said he expects Ueda to make appropriate policy decisions with support from Prime Minister Sanae Takaichi.

Bessent argued that Japan has probably reached the end of the Abenomics era, the economic strategy introduced under former Prime Minister Shinzo Abe in 2013. The program combined aggressive monetary easing, fiscal spending and structural reforms to pull Japan out of prolonged deflation.

The Treasury secretary plans to meet Ueda during the Group of 20 finance leaders meeting in Asheville, North Carolina, beginning Monday.

Markets are increasingly expecting another BOJ interest rate hike in September following June’s increase. Reuters has reported that policymakers are considering raising rates faster than the recent pace of roughly twice annually as inflation risks persist.

Bessent said Japan has already overcome deflation and is transitioning toward “Takaichi-nomics,” which he characterized as more shareholder-friendly and focused on deregulation.

However, Takaichi’s ambitious spending plans have raised concerns about Japan’s fiscal outlook. The benchmark 10-year Japanese government bond yield climbed to a three-decade high of 2.945% earlier in August as investors weighed higher government spending, inflation and Japan’s substantial public debt.