This hedge fund veteran, who once made $1 billion through speculative forex trades, is teaming up with Japan to launch the first currency intervention in nearly 30 years, employing unconventional tactics that have left Wall Street stunned.
To show journalists the contents of his notebook, U.S. Treasury Secretary Bessent deliberately displayed a "to-do" item: buy up to $10 billion in Japanese yen.
This scene is not from a movie plot, but rather a public intervention in the U.S.-Japan coordinated effort to support the yen, spearheaded by Bessent. Leveraging his experience on Wall Street, where he helped George Soros’s fund earn $1 billion through foreign exchange trading, this Trump administration Treasury Secretary is intervening in the currency markets in a manner unlike traditional Treasury Secretaries.
This coordinated effort by Washington and Tokyo to stabilize the yen marks the first such intervention in nearly 30 years. In addition to publicly displaying his notes, Bessent also took a series of unconventional measures, including tapping into U.S.-held euro reserves and publicly referencing a Federal Reserve liquidity tool available to Japan.
Stephen Myrow, managing partner at Beacon Policy Advisors and a former Treasury official in the Bush administration, said: “I feel like he’s more thinking, ‘Hmm, that would have been a good move when I was a trader.’”
Miero believes that Bessent’s approach in the role of Treasury Secretary differs from that of traditional officials. “He operates very comfortably beyond the boundaries of his official duties, because his ‘scope’ is not the traditional Treasury scope—it’s market credibility.”
The U.S.-Japan joint intervention has yielded initial results, with the yen rebounding from its lowest level in 40 years. However, market traders are watching to see whether this upward trend can be sustained. Bessent said on Tuesday that persistent weakness in the yen could pose a risk of further depreciation in other Asian currencies, hinting that additional measures may be taken in the future.
This action also reflects a shift in America’s economic diplomacy approach.
Recent U.S. Secretaries of the Treasury, including Henry Paulson and Robert Rubin, both former executives at Goldman Sachs, have largely come from a "sell-side" financial industry background, with their primary focus typically on risk management.
Bessent, with decades of hedge fund experience, belongs to a different category.
“We’ve never had someone with a true ‘buy-side’ background,” Miro said. “He’s more like a macro trader than a traditional finance minister.”
In June this year, Bessent outlined his economic governance philosophy in a speech at the Economic Club of New York, including support for allied nations willing to coordinate actions with the U.S. government.
Last Sunday, Trump mentioned that the U.S. would gain "economic benefits" from yen intervention but did not elaborate further.
Bessenet had previously expressed concerns that changes in the Japanese market could impact the U.S. Treasury market, while both Trump and Bessenet emphasized the importance of the U.S.-Japan alliance.
Bessent confirmed on X last Sunday that U.S. officials participated in the coordinated intervention to support the yen. Previously, he had shown a notebook to reporters at Friday’s cabinet meeting, listing yen purchases as an “action item.”
“I just wanted to make sure all the reporters lurking in the background know that ‘JPY’ is the symbol for the Japanese yen,” Bessent said in an interview with CNBC on Tuesday.
He also confirmed that the United States utilized its euro reserves. Analysts believe this move may have been intended to mitigate the impact of a weakening dollar.
From Argentina to Japan, Bessent expands the use of Treasury tools.
Hedge fund traders can typically exit positions quickly after a successful trade, but the finance minister does not have the same flexibility.
Last year, Bessent was rewarded for his high-risk bet on Argentina, where Trump ally and Argentine President Javier Milei achieved an unexpected victory in the legislative elections.
Today, Bessent has tied his personal reputation to the movement of the Japanese yen.
The Japanese yen has long been under pressure due to Japan’s fiscal policies and the Bank of Japan’s slow pace of interest rate hikes, leading market concerns about further depreciation.
Chris Turner, Global Head of Markets at ING, said that the cases of Argentina and Japan show that the U.S. Treasury is increasingly willing to use the Exchange Stabilization Fund (ESF) to serve broader economic and geopolitical objectives.
“This marks a significant departure from the relatively passive U.S. foreign exchange policy of the past two decades,” Turner said.
Bessent’s ability to take on higher risk is also related to his influence within the Trump administration.
On Tuesday, Trump attended the swearing-in ceremony of Jay Clayton, the new Director of National Intelligence, hosted by Betancourt. On Wednesday, Betancourt is expected to join House Speaker Mike Johnson in Arizona to showcase the administration’s achievements ahead of the midterm elections.
Bessent also explicitly stated that he believes there are broader strategic considerations behind the cases of Argentina and Japan.
On Argentina, he emphasized last year that Milei’s electoral victory helped drive a shift toward right-wing political forces in Latin America. Since then, conservative leaders have also won presidential elections in Colombia and Peru.
On the issue of Japan, Bessent said on Tuesday that the yen's depreciation would not only intensify inflationary pressures in Japan but could also affect the entire Asian currency system. "If the yen weakens significantly, other currencies will follow," Bessent said.
Bessent deeply understands the Japanese market.
Bessent has extensive experience researching and trading in the Japanese economy.
He has visited Japan over 50 times, including three visits during his tenure as Finance Minister. In the early 2010s, he traveled to Japan monthly to gain a deeper understanding of the local economic environment.
Prior to joining Bessent, his former boss Soros earned over $1 billion by betting on the depreciation of the Japanese yen during the period when former Japanese Prime Minister Shinzo Abe pushed for economic reforms.
Today, Bessent continues to maintain close communication with Japanese officials, including Finance Minister Katsunobu Kato and Bank of Japan Governor Kazuo Ueda. Bessent refers to Ueda as a "longtime friend."
During his time working under Soros, Bessent also collaborated with renowned hedge fund trader Stanley Druckenmiller, who later became the mentor of current Federal Reserve Chair Kevin Warsh.
During the Senate confirmation hearing in April, Waugh expressed support for the government’s “economic statecraft agenda” but did not elaborate on his views regarding the Federal Reserve’s role.
In contrast, Bessent has more openly emphasized the role of fiscal tools in economic diplomacy.
Last Sunday and this Tuesday, he mentioned a tool used by the Federal Reserve, suggesting that Japan could utilize this mechanism to support the yen without immediately selling its more than $1 trillion in U.S. Treasury reserves.
Bessen refers to the FIMA Repo Facility, a repurchase agreement facility provided by the Federal Reserve to foreign and international monetary authorities.
“This is a very powerful tool, and it was specifically designed for situations like this,” Bessent said in an interview with CNBC.