Bessent: Yen moves contained, backs Ueda before G20

By calling the yen's recent decline well contained, Bessent sends a significant signal, reducing the likelihood of another joint US-Japan intervention similar to the one performed last month when the yen reached 40-year lows. By not urging the BOJ to raise rates consecutively and deferring to Ueda's decisions, Bessent puts the speed of Japanese tightening under Tokyo's control, which markets could interpret as lowering the probability of an aggressive near-term move. His statement that Japan may have reached the end of Abenomics, combined with his approval of less government intervention in economic policy under the current administration, indicates ongoing US support for Tokyo's gradual policy normalisation rather than a demand for quicker yen support. With no new intervention indicated and the BOJ setting its own pace, USD/JPY will probably stay responsive to upcoming Japanese data and comments from the G20 meeting rather than to fresh US pressure.

• Goldman says yen strength depends on BOJ hike, not capital repatriation or intervention

Bessent indicated that Washington does not see a need for new yen intervention and is comfortable letting Ueda determine his own pace on interest rates.

Summary:

• In a Reuters interview, Treasury Secretary Scott Bessent stated that recent yen movements are quite well contained, dismissing the notion that they are disorderly.
• He expects BOJ Governor Kazuo Ueda to make correct monetary policy decisions with the support of Prime Minister Sanae Takaichi.
• Bessent refused to comment on whether the BOJ should consider consecutive rate hikes, stating he would not instruct the central bank.
• He stated that Japan has likely reached the conclusion of Abenomics, which he described as a reflationary program.
• Bessent said that less government intervention in economic policy under PM Takaichi implies that Japan should allow the benefits of Abenomics to continue unfolding.
• He intends to meet Ueda on the sidelines of the G20 finance leaders' meeting starting Monday in Asheville, North Carolina, and praised Ueda as an underrated, savvy market operator he has known for 15 years.

On Sunday, US Treasury Secretary Scott Bessent said that recent yen declines are still well contained, countering suggestions that the currency's renewed weakness is similar to the disorderly moves that led to a rare joint US-Japan intervention last month. In a Reuters interview, Bessent said he does not see a need to describe the yen's current trend as disorderly, in sharp contrast to the terminology both governments used in August when the yen hit its weakest level against the dollar since 1986. That previous event involved Japan and the US conducting their first coordinated currency intervention since 1998, purchasing yen after it fell to about 163.73 per dollar before rebounding after the announcement. At that time, Japanese officials said the operation aimed at excessive volatility, while Bessent had stated that a stable yen was important not only for the US but also for the broader region. His recent remarks indicate that Washington currently does not see conditions that would justify a repeat of that action.

Regarding Japanese monetary policy, Bessent said he expects BOJ Governor Kazuo Ueda to make correct decisions with the support of PM Sanae Takaichi, and he declined to say whether the central bank should pursue consecutive rate hikes to support the yen. He described Ueda, whom he has known for 15 years, as a highly capable and underrated market operator, and said the two will meet on the sidelines of the G20 finance leaders' gathering that opens Monday in Asheville, North Carolina.

Bessent also gave a broader view of Japanese economic policy, stating that the country has probably reached the end of Abenomics, the reflationary program linked to former PM Shinzo Abe. He suggested that with less government intervention in economic policy under Takaichi, Japan should let the gains already made under that program continue rather than pursue additional active stimulus. The comments come as markets look for any indication from the G20 meeting on how Washington and Tokyo plan to coordinate on currency and monetary policy in the coming months.