Treasury Secretary Scott Bessent said Tuesday that the U.S. joined Japan’s effort to strengthen the yen because the currency’s weakness risked destabilizing markets across Asia.
“A stable yen is not only important for the U.S., but very important for the entire region,” Bessent said on CNBC’s “Squawk Box.”
Bessent said a sharply weaker yen could pressure other countries to devalue their currencies, pointing to volatility in the South Korean won and concerns that China’s yuan is undervalued.
“Given the trade flows, given the size of the economy, given their contribution to the global savings market, [it is] very important to have a stable yen,” Bessent said. “The Japanese government understands that, and we are proud to stand with them in implementing their policies and help them stabilize the region.”
The coordinated intervention is a rare U.S. effort to support another major currency and underscored Washington’s concern that prolonged yen weakness could fuel inflation in Japan, pressure other Asian currencies and destabilize global markets.
The Treasury Department sold euros from U.S. reserves and used the proceeds to buy yen as part of the coordinated operation. Bessent said he assured European officials that the euro sale was merely a reallocation of reserves.
A notepad in front of U.S. Secretary of the Treasury Scott Bessent reads “To Do Buy Japanese Yen $5-10 bil” as he participates in a cabinet meeting at Camp David, Maryland, U.S., July 31, 2026. The note, photographed at 11:33 EDT, came after Reuters earlier reported the Treasury had put banks on alert for a possible U.S. intervention in the market for Japan’s currency.
Daniel Heuer | Reuters
But Bessent said the purchases could only curb volatility in the short term and would need to be followed by Japanese policies addressing the forces driving the yen lower.
The U.S. and Japan carried out a coordinated yen-buying intervention after what Bessent described as a “substantial undervaluation” of the Japanese currency. He said the two governments had been in close contact and that Washington believed Japan would pursue policies intended to return the yen to a more normal level.
But, Bessent cautioned that intervention alone would not determine the currency’s direction.
“You can give market signals with intervention, but it’s policy that turns it,” he said, adding that the U.S. participated because it was optimistic about Japan’s policy path.
He declined to say whether the Bank of Japan should raise rates but said Japanese officials would need to follow the intervention with broader policy changes.
