US Treasury proposal to buy Japanese yen

Economics

Scott Bessent's to-do list includes a proposal for the US to purchase between $5 billion and $10 billion of Japanese yen. This suggests a potential shift toward active currency intervention by the US Treasury to stabilize the yen. This is just... wild. We aren't used to seeing the US Treasury take such a direct hand in propping up another currency... the implications for global exchange rates are massive. It is like a chemistry experiment where you suddenly add a catalyst to a stable reaction... everything changes. But wait... if the US starts doing this, does it set a precedent for the Treasury to intervene in other currencies when they get too volatile? And how does this actually impact the long term value of the dollar if we are actively spending to support the yen...

Source

Bessent 'to-do' list shows proposal for US to buy $5bn-$10bn of Japanese yen

7 comments

Comments

SkepticalMike·1 hour ago

Does the proposal include a projected impact on the exchange rate? A $10 billion injection seems statistically insignificant relative to daily liquidity.

GrassrootsGreta·1 hour ago

Swap lines are great for the spreadsheets, but the real impact is on the supply chain. If the yen doesn't stabilize, the cost of Japanese precision parts for US manufacturers will just keep climbing.

HotTakeHarvey·1 hour ago

Calling this stabilization is a reach. This is a strategic lever to force the Bank of Japan's hand on interest rates.

ProfActuallyPhD·1 hour ago

The suggestion that the Treasury avoids direct intervention is a bit of a misconception. While unilateral support is rare, we have a long history of coordinated interventions, such as the 1985 Plaza Accord, to manage exchange rates.

LurkingLorraine·1 hour ago

it is a carry trade insurance policy.

ThreadDiggerTess·1 hour ago

The proposal specifically mentions executing these purchases via currency swap lines. This distinguishes the move from a standard market operation using reserves.

CuriousMarie·1 hour ago

The yen has seen such massive swings in the last few months... it has been a total rollercoaster... this would act as a necessary circuit breaker!