United States Treasury Secretary Scott Bessent has spearheaded an unusual multi-billion dollar intervention to prop up the Japanese yen, marking a significant shift from his past role as a currency speculator. The coordinated effort with Japan, which saw billions of dollars poured into foreign exchange markets, aimed to stabilize the yen after it reached a historic low against the dollar on July 29.
Bessent, who as a hedge fund trader for George Soros famously bet against the British pound's survival within the Exchange Rate Mechanism in 1992, is now playing a role akin to a "gamekeeper" in currency markets, according to Alex Brummer.
The US intervention was notable because central banks typically intervene only in cases of "disorderly" market selling. However, Washington expressed concerns that the Bank of Japan's low key interest rate of 1 percent was insufficient to curb inflation, posing a risk of broader market instability. A particular fear was that Japan, a major holder of U.S. debt, might sell American bonds to support its currency, which could drive up U.S. borrowing costs. Additionally, a severely weakened yen could have triggered a wider economic crisis in Asia, reminiscent of the 1997 financial turmoil.
A note clutched by Bessent, inadvertently captured by a Reuters photographer, suggested the U.S. commitment to the intervention ranged from $5 billion to $10 billion. The operation uniquely utilized euro reserves, a move designed to avoid spooking bond markets. By strengthening the yen, the U.S. also aimed to make Japanese goods more expensive, potentially improving the U.S. trade deficit.
This engagement in currency activism is consistent with the current administration's approach. In October 2025, the U.S. government supported the Argentine peso to bolster economic reforms implemented by President Javier Milei. The administration is also seeking to increase the Federal Reserve's Foreign and International Monetary Authorities facility to $60 billion, providing greater capacity for future market interventions.