WASHINGTON
U.S. Treasury Secretary Scott Bessent directly challenged traders betting against the Japanese yen Tuesday, citing his insider knowledge of Bank of Japan policy moves.
"I am the house now, so when we intervene with the Japanese yen, I have pretty good insight into what the Bank of Japan is going to do," Bessent said at a Southern Methodist University event in Texas. "And you can bet against me if you want."
The dollar-yen pair traded near ¥153.6 on Wednesday, down from levels above ¥155 in recent weeks. Bessent has been collaborating with Japan's finance minister, Satsuki Katayama, on yen defense and has publicly urged the Bank of Japan to raise rates—a move that would support the currency and reduce Japan's need to sell U.S. Treasuries to fund intervention.
Sources indicate the Bank of Japan may increase its benchmark rate by 25 basis points at its Sept. 18 meeting. That hike would provide direct support for the yen and ease pressure on Japan's foreign exchange reserves.
Japan committed $96.4 billion to yen defense between July 30 and Aug. 26 as the currency hit a four-decade low. The United States participated in those purchases.
Hedge funds are now positioning for yen strength, betting the dollar-yen pair will fall below ¥150 by year-end. Options markets are pricing moves as low as ¥140.
Tadashi Matsukawa, head of bond investments at PineBridge Investments Japan in Tokyo, said Bessent's remarks carry weight for markets. "The message is clear: do not defy the Treasury Secretary," Matsukawa said.
Bessent has also expanded a Treasury buyback program for older government securities, characterizing it as an effort to ease market stress and improve liquidity in U.S. government debt.
