The U.S. Treasury Secretary Bessent publicly posted on X (formerly Twitter), the official social media account of the Department of the Treasury, stating: "The Trump administration stands by reliable allies in the United States. Economic security is national security, and the U.S.-Japan alliance is built upon both. The coordinated foreign exchange action conducted this Friday aims to address disorderly fluctuations in the yen. The U.S. Treasury will continue closely monitoring the situation and maintaining close communication with counterparts at Japan's Ministry of Finance and the Bank of Japan."

Bessent further stated: "Should the market experience renewed disorderly volatility, the United States will not hesitate to participate in further joint intervention; the Trump administration acknowledges Japan’s policy efforts to correct the significant undervaluation of the yen."

Bessent’s public remarks are not only an official endorsement of market rumors but also mark a deepening strategic alignment between the U.S. and Japan in financial matters.

The statement confirms prior market speculation that the U.S. and Japan indeed jointly carried out a foreign exchange intervention on Friday—buying yen and selling dollars. This marks the first joint intervention between the two countries in 15 years since the Great East Japan Earthquake in 2011, and the first time since the Asian financial crisis in 1998 that they have implemented a “yen-buying” intervention measure. Bessent explicitly declared his willingness to “not hesitate to participate in further joint intervention,” sending a strong warning signal to speculative capital betting against the yen.

By elevating this intervention to the level of “economic security is national security,” Bessent signals that the U.S. has now incorporated yen exchange rate stability into its global strategic framework. Analysts point out that if the yen continues to depreciate disorderly, it could trigger inflation within Japan, and financial turmoil may spill over, disrupting the U.S. Treasury market and undermining Japan’s strategic capability to support U.S. efforts to contain China in critical industrial chains such as semiconductors. Thus, the U.S. stepping in to support the yen essentially aims to stabilize the “financial foundation” of its Indo-Pacific alliance system.

In his statement, Bessent not only acknowledged Japan’s efforts to correct the yen’s undervaluation but also clearly affirmed “strong support for Japan’s decisive market and monetary policy measures taken to rectify the significant undervaluation of the yen.” This is widely interpreted by markets as an open signal from the U.S. pressuring the Bank of Japan to accelerate its interest rate hikes. Pure exchange rate intervention alone cannot reverse the long-term downward trend of the yen; only when combined with tighter monetary policies from the Bank of Japan can the yen’s decline be fundamentally reversed.

Bessent specifically highlighted that the Foreign and International Monetary Authorities Repurchase Facility (FIMA repurchase facility) serves as an important backstop, and encouraged expanding its scale in the coming months. This detail is crucial. If Japan needs to sustain foreign exchange interventions, it may have to sell its holdings of U.S. Treasuries to raise funds—potentially causing disruption to the U.S. bond market. The FIMA tool provides temporary dollar liquidity to foreign central banks like Japan’s, enabling them to obtain funding for intervention without having to sell U.S. debt, thus stabilizing the yen while protecting the U.S. financial markets from adverse impacts.

In sum, Bessent’s statement is far more than a mere verbal intervention in the foreign exchange market—it constitutes a comprehensive strategy combining “joint market entry, policy pressure, and liquidity support.” It indicates that the U.S. is intervening in yen exchange rate management with unprecedented intensity, with the core objective being to maintain financial stability within the U.S.-Japan alliance while ensuring that the reconfiguration of global capital flows remains under American control.

Original article: toutiao.com/article/1872468581846026/

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