Bessent warns yen volatility could destabilize global markets
MacroDigital Finance
U.S. Treasury Secretary Scott Bessent warned that disorderly volatility in the Japanese yen could trigger forced position unwinds with the potential to destabilize global financial markets and push up borrowing costs for American households and businesses, according to official correspondence released on Friday. In an Aug. 27 letter to Democratic Senator Elizabeth Warren, posted on his X account a day later, Bessent defended the joint currency intervention with Tokyo, noting that the Treasury used its Exchange Stabilization Fund to exchange foreign-currency assets for yen. He drew a comparison to the fund's use in Argentina, where it helped stabilize the peso and established a $20 billion currency swap facility. The rare joint yen-buying operation on July 31 initially helped the yen rally from a 40-year low near 164 per dollar to 155.20, but the currency has since drifted back toward 160, briefly dipping below that level on Friday after remarks from Federal Reserve Chair Kevin Warsh.
