U.S. Treasury Secretary Scott Bessent challenged traders to bet against his campaign to strengthen the yen, saying his coordination with Japanese officials gives him rare insight into the Bank of Japan’s next moves.
He made the comment Tuesday at a Southern Methodist University event in Texas, defending his unusually direct role in Japanese currency policy.
“I am the house now, so when we intervene with the Japanese yen, I have pretty good insight into what the Japanese, what the Bank of Japan is going to do, what Japanese policymakers are going to do,” Bessent said. “And you can bet against me if you want.”
Bessent Doubles Down on Yen Support
The remarks add to an unusually direct effort by Bessent to prop up the currency. He has worked with Japan’s finance minister, Satsuki Katayama, on currency intervention, and has pushed the Bank of Japan (BOJ) to raise interest rates.
A rate increase would support the yen and ease Japan’s need to sell U.S. Treasuries to fund intervention. The BOJ may hike rates a quarter point at its Sept. 18 meeting, sources say.
Dollar-yen has already fallen toward its strongest level of the year. It traded near ¥153.6 on Wednesday, down from levels above ¥155 in recent weeks.
Hedge funds are now betting the pair falls below ¥150 by year-end, and some options trades target a move as low as ¥140, a bet on further yen strength rather than a reversal.
“Bessent’s remarks carry immense weight. The message is clear: do not defy the Treasury Secretary.”
— Tadashi Matsukawa, head of bond investments at PineBridge Investments Japan in Tokyo, via Bloomberg
Japan spent a massive $96.4 billion between July 30 and Aug. 26 to defend the yen, which had slid to a four-decade low, with the U.S. joining in with yen purchases of its own.
Bessent has also expanded a Treasury buyback program for older government securities. He said the move was meant to calm a “fever” in the bond market.
Whether Bessent’s confidence outlasts market skepticism may become clear once the BOJ delivers its rate decision this month.