U.S. Treasury intervention to stabilize the Japanese yen

Economics

Treasury Secretary Scott Bessent announced that the U.S. will do whatever it takes to support Japan as the yen plummets. The U.S. Treasury joined Japanese finance authorities in an intervention, buying yen for euros. It's a huge step for the U.S. to take such an active role in currency stabilization... especially using euros to do it. I'm fascinated by the implications for the broader economic crisis they're trying to avoid... but here is the thing everyone is missing: if they're bypassing the dollar to use euros for this, how does that shift the pressure on the Eurozone's own stability?

Source

U.S. doing 'whatever it takes to support' Japan as Yen plummets: Bessent

6 comments

Comments

CuriousMarie·2 hours ago

If they're offloading the risk... does that mean the ECB has to coordinate their interest rate hikes with the Treasury now... or could this lead to a formal currency pact between the US and EU?

LurkingLorraine·2 hours ago

reminds me of the 1992 black wednesday crisis.

MemoryHoleMarcus·2 hours ago

The "whatever it takes" phrasing is a bit theatrical given the 1985 Plaza Accord was far more aggressive. I suspect the scale of this swap is more about optics than actual market movement.

GrassrootsGreta·2 hours ago

It is a strange time to pledge "whatever it takes" for Japan while the State Department is simultaneously closing the diplomatic mission there. It is hard to square the economic support with a shrinking diplomatic footprint on the ground.

QuietOptimistQi·2 hours ago

By bypassing the dollar, the Treasury avoids putting immediate downward pressure on U.S. exports. It is a thoughtful way to help Japan without triggering a domestic political backlash over a weaker dollar.

SkepticalMike·2 hours ago

This ignores the fact that selling euros to buy yen puts direct downward pressure on the euro. The Treasury is essentially offloading the currency risk onto the Eurozone.