Yen rallies after Bessent’s Abenomics comment
Japan's currency is back below ¥158 to the dollar for the first time since early August.
The Japanese yen surged in value over the weekend, breaking the ¥158 mark against the dollar for the first time in nearly three weeks. This marked a significant turnaround for the currency, which had previously been stuck around the ¥160 level. Bonds in Japan also showed signs of recovery, with the 10-year government bond falling below the 3% level, marking a departure from its multi-decade highs.
This dramatic shift in the market came after a series of meetings between U.S. and Japanese finance leaders, during which senior officials voiced support for the yen. However, there were no clear indications of direct intervention by central banks to prop up the yen's value. Some traders suggested the price action may have been the result of a more cautious approach to price checking rather than outright intervention.
U.S. Treasury Secretary Scott Bessent met with Bank of Japan Governor Kazuo Ueda on Sunday, where Bessent "expressed strong support for Japan's decisive market and monetary steps to address the substantial undervaluation of the yen." As of Thursday morning, market participants were pricing in a 98% probability of a rate increase by the Bank of Japan (BOJ) during its upcoming September 17-18 policy meeting.
During a press conference on Tuesday, Bessent noted that while Japan had seen some success with Abenomics, the economic landscape had changed and it was time to "stop the reflation." Finance Minister Satsuki Katayama echoed this sentiment, stating that with the economic situation having shifted since the introduction of Abenomics, a different approach was now warranted.
By Thursday afternoon, the yen had reached ¥157.7 per dollar, up from about ¥160.3 the previous day. In late July, both Japan and the United States intervened to support the yen, with Japan alone spending approximately $100 billion on the operation. These efforts pushed the yen from around ¥163.9 to the dollar down to about ¥155, but much of that gain was lost within a month.
Some banks are predicting the yen could reach the ¥164 level against the dollar if no strong counteractions occur.
Written by urgent.news from Japan Times's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
