Treasury Secretary Scott Bessent has challenged traders to test his determination to strengthen the yen. He said that when he makes market predictions today, he is effectively acting on inside information.
“I’m the house now, so when we intervene in the yen exchange rate, I have a very clear understanding of what the Japanese, the Bank of Japan, and Japanese policymakers are doing,” Bessent said Tuesday at an event at Southern Methodist University in Texas. “If you want to bet against me, go ahead.”
Bessent’s remarks represent one of his most forceful statements yet, as he undertakes an unusual campaign to influence market movements despite investor skepticism. The former hedge fund manager, known for massive foreign exchange bets, recently led U.S. authorities in their first purchase of yen in three decades and unexpectedly announced last month plans to increase Treasury bond buybacks to curb soaring yields.
His comments also highlight his extraordinary level of involvement in Japan’s economic policymaking. Japan is one of the world’s largest holders of U.S. Treasuries. Bessent has coordinated with Japan’s Finance Minister, Mayumi Katsuyama, on currency intervention and has consistently applied public pressure on the Bank of Japan to raise interest rates. Such moves would support the yen and reduce Japan’s need to sell U.S. Treasuries to intervene in markets.
According to informed sources, the Bank of Japan is leaning toward raising its benchmark interest rate by 0.25 percentage points on September 18, while still leaving room for faster tightening later. Over the past year, Bessent has repeatedly suggested he would prefer the Bank of Japan to boost the yen through rate hikes rather than frequent market interventions.
“Bessent’s comments suggest he expects the yen to rebound even at current levels,” said Takumi Naya, head of the foreign exchange trading group at Sumitomo Mitsui Banking Corporation’s Global Markets Division. “Besides closing yen short positions, investors might shift toward going long on the yen. The dollar-yen exchange rate could even fall below 150 yen this month.”
Although the Bank of Japan appears likely to raise its benchmark rate by 0.25 percentage points this month to address rising price pressures, Wall Street strategists remain divided over whether the yen’s recent rally can be sustained.
Wells Fargo notes that the Bank of Japan may struggle to deliver rate hikes beyond market expectations, which would limit further yen appreciation. JPMorgan, meanwhile, argues that a stronger yen itself could dampen the Bank of Japan’s incentive to raise rates.
