Bessent's defense of the Yen is a risky innovation
Treasury Secretary Scott Bessent’s decision to join Japan in supporting the yen was the first joint intervention of its kind for decades and took investors by surprise. There’s a respectable case for such cooperation: The U.S. and Japan can both benefit, at least for a while. But the policy fails to tackle the underlying problem and could easily backfire — not least by drawing the Federal Reserve…
Treasury Secretary Scott Bessent's decision to join Japan in supporting the yen marks the first joint intervention of its kind in decades, surprising investors. While there is a case for such cooperation, as the U.S. and Japan could both benefit for a time, the policy does not address the root issue and risks backfiring. The yen has recently plummeted to its weakest level against the dollar in 40 years, largely due to mounting inflation concerns.
Supporting the yen alleviates price pressures and stabilizes currency markets. However, Japan would need to purchase yen with dollars from its reserves, selling U.S. Treasuries and driving dollar interest rates up. Bessent does not want to raise borrowing costs for Americans, hoping to intercede at an awkward time for the Federal Reserve.
Written by urgent.news from The Korea Times's reporting — not their text. Machine-written; read the original for the full account.
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- Bessent's defense of the Yen is a risky innovation koreatimes.co.kr
