US Treasury Secretary Bessent: Many Asian currencies track Yen now, including Won and Yuan

US Treasury Secretary Scott Bessent highlighted the correlation between the Japanese Yen's weakness and the inflation problem faced by Japan, as well as the potential for other Asian currencies to follow suit, including the Won and Yuan. The Secretary emphasized that the US is closely monitoring the situation and is ready to provide support to Japan to ensure the stability of the global economy.

Bessent stressed that a stable Yen is crucial not only for the US but also for the entire region of Asia. He pointed out that a significant depreciation of the Yen could trigger a ripple effect, causing other Asian currencies to depreciate as well. The Secretary expressed confidence in Bank of Japan Governor Ueda, acknowledging his expertise in navigating the market.

Currently, the USD/JPY exchange rate stands at 157.65, having decreased by 0.04% for the day. The Japanese Yen, one of the world's most traded currencies, is influenced by various factors, including Japan's economic performance, the Bank of Japan's policies, the interest rate differential between Japanese and US bonds, and overall risk sentiment among traders.

The Bank of Japan's role in currency control is vital in determining the Yen's value. In the past, the Bank of Japan's ultra-loose monetary policy between 2013 and 2024 led to the depreciation of the Yen due to a growing policy divergence between the Bank of Japan and other central banks, particularly the US Federal Reserve. This divergence was marked by an increasing gap between the 10-year US and Japanese bond yields, which benefited the US Dollar against the Japanese Yen.

Recently, the gradual unwinding of this ultra-loose policy and interest rate cuts in other major central banks have provided some support to the Yen. The Japanese Yen is often viewed as a safe-haven investment during times of market stress, as investors tend to favor it due to its perceived reliability and stability. In times of turmoil, the Yen's value against other currencies, perceived as riskier investments, tends to strengthen.