U.S. Treasury Secretary Bessent said he expects the Japanese government and the Bank of Japan to take measures that would support a stronger yen, strengthening market expectations for a September rate hike. The yen rose against the dollar and traded at around ¥159.7 per dollar.
U.S. Treasury Secretary Bessent was reported to have expressed the view that the Bank of Japan and the Japanese government should take measures that would support a stronger yen. The remarks were made at the G20 Finance Ministers and Central Bank Governors Meeting, prompting broader market acceptance that Japan had grounds for responding to yen weakness.
Following the remarks, the yen rose against the dollar, with the dollar-yen exchange rate on Monday trading generally around ¥159.73 per dollar. The market was reported to view this move as a basis for possible future intervention and policy responses.
The Bank of Japan is expected to potentially raise interest rates at its monetary policy meeting on 17–18 September. Consideration is being given to raising the current pace of roughly two rate hikes a year and proceeding with the normalization of monetary policy.
Some have pointed out that continued yen weakness would increase import prices and inflationary pressure. Although Japan and the United States jointly intervened in the foreign-exchange market at the end of July, some market participants remain cautious about a prolonged period of yen appreciation.