'Japan Expert' Bessent's Remarks on the Yen Draw Attention... "A Double-Edged Sword" for Takaichi

Meeting with Japanese Prime Minister Sanae Takaichi on the 12th
Preliminary Step Ahead of U.S.-China Summit
Large-Scale Market Intervention Observed to Support the Yen

As Japan is observed to have launched large-scale market intervention to support the yen, the market is closely watching what U.S. Treasury Secretary Scott Bessent, who will visit Japan on the 12th, will say regarding the foreign exchange market, including the yen.

October 2025, Scott Bessent, U.S. Secretary of the Treasury. Photo by Reuters and Yonhap News

On the 10th (local time), Secretary Bessent announced via social media that he would meet with Japanese Prime Minister Sanae Takaichi and Finance Minister Satsuki Katayama on the 12th. This visit to Japan is a preliminary move ahead of the U.S.-China summit scheduled for the 14th and 15th.

Bloomberg News reported, "This could provide Japan with reassurance that the United States is not solely focused on its relationship with China amid ongoing U.S.-China tensions. However, Bessent's attention could be a double-edged sword for Prime Minister Takaichi." The report added, "Prime Minister Takaichi must maintain U.S. support while also protecting her own policy leadership."

The market is closely monitoring potential signs of tension between the U.S. and Japan. Previously, Secretary Bessent had expressed a critical stance toward Japan's method of foreign exchange market intervention and has preferred raising the policy interest rate. According to Bloomberg's own data analysis, the Japanese government is estimated to have intervened in the foreign exchange market with about 10 trillion yen (approximately 93 trillion won) since April 30 to defend the yen.

Morita Chotaro, chief strategist at Japan Asset Management who has analyzed the Japanese market for over 30 years, stated, "If Secretary Bessent raises the level of demands, Japan may have little room to object," adding, "There is no doubt that his comments regarding Japan will be extremely important."

The Japanese government bond market is on a downward trend. This is due to heightened geopolitical tensions resulting from the U.S.-Iran war. Last month, the yield on Japan's 10-year bonds surged to around 2.53%, the highest level since 1997. As of today, it remains at 2.516%. Bond prices and yields move in opposite directions.

This rise in U.S. interest rates triggered by Japan is identified as a factor that could complicate the goals of the Trump Administration. Previously, Secretary Bessent cited the yield on the 10-year U.S. Treasury bond as the most important market indicator, arguing that the long-term interest rate, such as the 10-year bond, has a greater impact on the real economy, including lending, than the Federal Reserve's short-term policy rate.

Currently, in Japan, the likelihood of a rate hike in mid-next month has increased. According to the recently released minutes of the Bank of Japan’s (BOJ) Monetary Policy Meeting in March, many BOJ board members shared the view that it would be necessary to raise interest rates if the energy shock caused by the Iran war is prolonged and inflation concerns grow.

Secretary Bessent, who is also known as a bond expert familiar with the Japanese market, previously made massive profits by betting on yen depreciation as a hedge fund manager. It is reported that George Soros, the hedge fund tycoon who was Bessent's boss at the time, earned approximately 1 billion dollars through this trade.

Secretary Bessent has also been observed to actively intervene in Japan's policy. In a past interview with Fox Business, he mentioned having conversations with Japanese officials and said, "I am confident they will act to end volatility." In fact, Finance Minister Katayama has emphasized that Japan is pursuing a "responsible and sustainable" fiscal policy while urging for market stabilization.

Meanwhile, after completing his schedule in Japan, Secretary Bessent will travel to Seoul on the 13th to hold talks with Chinese Vice Premier He Lifeng. According to China's Ministry of Commerce, the Seoul meeting will focus on trade issues ahead of the meeting between U.S. President Donald Trump and Chinese President Xi Jinping to be held in Beijing.

This content was produced with the assistance of AI translation services.