US Treasury moves to support yen; photo shows Bessent notepad listing $5-10bn yen purchase
The Facts
- The US Treasury notified major banks on Friday, through the New York Fed, that it could conduct currency trades to support the yen and asked them to be ready for future action.
- The Financial Times reported the New York Fed sold euros and bought yen on the Treasury's behalf on Friday, with Goldman Sachs and Morgan Stanley executing the trades; banks had earlier been told to prepare executable yen-for-euro trades.
- Japanese authorities conducted a yen-buying, dollar-selling intervention during New York trading hours on Thursday, their first such operation in about three months.
- The intervention came after the yen fell to around four-decade lows against the dollar, near 164 yen, and lifted the currency more than 3% in a single session.
- Market sources described the operation as coordinated with South Korea, which sold dollars to support the won at around the same time.
- The Bank of Japan kept its policy rate unchanged at 1.0% on Friday, with one board member dissenting in favour of a hike; the yen weakened after the decision.
- A weak yen has raised the cost of imports and living costs in Japan, compounded by an energy price shock linked to the Iran war, which is the stated concern behind the intervention.
- The yen gave back part of its gains by Friday, with dollar/yen trading back around 160, leaving it unclear whether authorities had durably changed the currency's direction.
Context
What exactly did the photograph show?
The image, taken at 11.33am local time over Bessent's shoulder during the portion of a Camp David cabinet meeting open to journalists, showed a Camp David notepad with the underscored words "To Do" followed by "Buy Japanese Yen (JPY) $5-10 bil". Bessent's name card was visible on the conference table immediately above the notepad. A Treasury spokesperson did not immediately respond to a Reuters request for comment on the notepad's contents or on whether the Treasury had intervened Guardian.
Why would the United States buy yen?
Currency intervention by the US is uncommon; the Treasury holds part of its foreign-currency reserves in euros and would sell those to buy yen, with the New York Fed acting as its agent Investing.com,Investing.com. Bessent said on Thursday that Japan may have intervened and that the yen "seems very undervalued to me" Investing.com. Analysts framed US participation as raising the prospect of coordinated US-Japanese action rather than an isolated move by Tokyo Investing.com.
Who else is affected by a sharp yen move?
The yen is widely used as a funding currency, meaning investors borrow it cheaply to buy riskier assets; a sudden yen spike can force those positions to be unwound, spilling into equities, bonds and commodities Investing.com,Investing.com. Within Japan, a stronger yen squeezes exporters such as automakers and chip equipment firms while easing costs for domestically focused sectors Investing.com. Japanese exporters including Sony have credited the weak yen with boosting their recent earnings Free Malaysia Today,Investing.com.
Where Left and Right agree, and where they split
- Where Left and Right agree
- Billions of public intervention moved through the New York Fed, dollar/yen back near 160 by Friday, and Japanese households still absorbing higher import and living costs.
- Where Left and Right split
- Public money routed through two private banks with disclosure left to a photographer, or Japan leaning on intervention instead of its own rate policy.
How left and right read it
The Treasury told major banks on Friday it might trade to support the yen, then had the New York Fed sell euros and buy yen, with Goldman Sachs and Morgan Stanley executing. Billions in public intervention, routed through two private firms — and the public learned the scale from a notepad caught on camera. Households in Japan are already absorbing higher import and living costs. Why should disclosure depend on a photographer's angle?
“During a cabinet meeting at Camp David on Friday, the US treasury secretary Scott Bessent carelessly revealed plans for the US to buy $5-$10bn in Japanese yen in a scribbled "to do" list left visible to a Reuters photographer.” — The Guardian
The Bank of Japan held its policy rate at 1.0% on Friday, with a lone dissent for a hike, and the yen weakened after the decision. Then the New York Fed sold euros and bought yen on the Treasury's behalf. By Friday dollar/yen was back near 160. Intervention is no substitute for a central bank's own rate discipline — Japan should carry that burden itself.
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