The U.S. Is Now Buying Yen
In a Nutshell
The US is buying yen to quietly weaken the dollar, helping both America reshore manufacturing and Japan avoid a treasury selloff that would spike US borrowing costs. With $40 trillion in debt, the US faces an impossible trillemma: it can only achieve two of three goals—reshoring, price stability, and economic stability—so it must sacrifice the dollar through deniable intervention rather than explicit devaluation. Treasury Secretary Scott Bessent's leaked note signals US commitment to yen strength, which aligns with Trump's preference for a weaker dollar and sets up future monetary expansion as the solution to rising debt service costs.
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The United States government is spending money to save another country's currency for the first time in 28 years. Japan and the US warned of further coordinated action in FX markets following the first joint intervention in 15 years to lift the Japanese currency from a near four-decade low. President Trump stated the joint intervention signals Washington's friendship with Tokyo, noting "We have a good relationship with Japan. We're very strong, very, very strong financially and they are, you know, they have a weakening yen and they wanted a little bit of help and we're always there for Japan. Japan's been very good to us with the exception, of course, of Pearl Harbor."
The world learned about this intervention through a photo of a note belonging to Scott Bessent, the US Treasury Secretary. The note stated: "To do by Japanese yen 5 to 10 billion." A Reuters photographer captured and published the image, revealing that the United States Treasury is intervening in the Japanese currency market.
This is a rare occurrence, prompting questions about why the US is doing this and whether the photo was an accident or leaked on purpose. Two theories exist: Theory one suggests it's a genuine to-do list showing the US is actually buying yen. Theory two proposes the picture was planted deliberately to manipulate investor behavior, as someone of Bessent's expertise wouldn't need to write down such specific instructions including the ticker symbol JPY.
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