(LEAD) Bessent cites volatility in Korean won while stressing stable yen's importance

U.S. Treasury Secretary Scott Bessent emphasized Tuesday the volatility experienced by the South Korean won, while stressing the critical importance of a stable yen for the entire region. The remarks came during an interview on CNBC following a joint intervention by the United States and Japan in the foreign exchange market to counter the yen's sharp decline against the U.S. dollar.

Bessent attributed the instability to the yen's weakness, suggesting that a substantial drop could trigger a chain reaction among other currencies. Reflecting on his economic perspective, Bessent posited that the Asian financial crisis of the 1990s could have been partly driven by an overly weak yen. He voiced optimism that Japan's sound policies would bring the yen back to a more balanced equilibrium.

Bessent highlighted Japan's significant contribution to the global savings market, its substantial trade flows, and the country's size as factors necessitating a stable yen. He also reaffirmed the U.S.'s close communication with Japan and its readiness to support Tokyo in stabilizing the region's currency. Regarding the carry trade, Bessent predicted its persistence, noting Japan's vast surplus of foreign assets and its long-standing accumulation of overseas holdings.