Bessent wanted to help Japan support its currency, so he let reporters catch a glimpse of his notebook, where a conspicuous to-do item read: buy up to $10 billion worth of yen. This was an unconventional move, but it has become a signature of Bessent's style. In his early Wall Street career, he made $1 billion betting on currency movements while working for George Soros. As Treasury Secretary under Trump, he launched a high-risk rescue plan for Argentina. Now, he is extending a helping hand to another US ally.
The joint effort between Washington and Tokyo to boost the yen is the first of its kind in nearly three decades. Beyond the "notebook strategy," Bessent has also deployed tools that surprised some Treasury observers, such as using US-held euros and promoting a Federal Reserve facility that Japan could use. Steven Myrow, managing partner at Beacon Policy Advisors and a former Treasury official under George W. Bush, said, "I think he tends to think like, 'Well, if I were still a trader, this would be a good move.' He is very comfortable crossover, because his boundaries are not the traditional Treasury boundaries. He values market credibility."
Initial results were encouraging, as the intervention helped the Japanese currency rebound from a 40-year low. However, as traders focused on the sustainability of the rebound, Bessent signaled on Tuesday that further action would be taken. He said that the yen's weakness exacerbated the risk of broader currency depreciation across Asia. If these strategies indicate a more proactive economic diplomacy, this could be the result of the Treasury chief's professional background. Most recent Treasury secretaries, such as former Goldman Sachs executives Henry Paulson and Robert Rubin, came from the so-called financial sell-side, where risk management was a core concern. Bessent, with decades of hedge fund career, is completely different. Myrow said, "We have never had someone who is truly from the buy-side. His behavior is more like a macro trader than a traditional Treasury secretary."
Bessent outlined his philosophy of economic statecraft in a speech to the Economic Club of New York in June. In practice, part of it involves supporting countries willing to "cooperate" with Washington. Commenting on the yen intervention on Sunday, Trump said the US would gain "economic benefits," but did not specify what they would be. Bessent expressed concerns about the spillover effects of the Japanese market on the US Treasury market. Both also cited the importance of the US-Japan alliance. Bessent wrote on X on Sunday, "The Trump administration is delivering on its commitment to America's trusted partners," in a post confirming the joint intervention to assist the yen. Before the intervention, he had effectively shown his notebook to reporters at a cabinet meeting on Friday, listing buying yen as a "to-do" item. Bessent told media on Tuesday, "I just want to make sure that all the reporters who looked over my shoulder also knew the code for the Japanese yen, 'JPY'." He also confirmed that the US used euros, which analysts suspect was aimed at limiting downside pressure on the dollar.
Hedge fund traders enjoy the luxury of closing positions immediately after a successful bet, which is not necessarily the case for a Treasury secretary. Last year's bet on Argentina paid off after President Javier Milei, an ally of Trump, won a surprise victory in legislative elections. Now, Bessent has tied some of his credibility to the yen, which has been highly vulnerable to investor concerns about Japan's fiscal policy and the slow pace of interest rate hikes by the Bank of Japan. Chris Turner, global head of markets at ING, said, referring to the Treasury's Exchange Stabilization Fund (ESF) that Bessent has mobilized, "Looking at the Argentina and Japan events together, it suggests the Treasury is increasingly willing to use the ESF to support broader economic and geopolitical objectives. This marks a significant shift from the relatively passive stance that has shaped US foreign exchange policy for most of the past two decades."
Bessent has been able to maintain a strong position within the Trump administration and take risks. Tuesday provided a potential example: when Bessent presided over the swearing-in ceremony for new Director of National Intelligence Jay Clayton, Trump watched from the sidelines. On Wednesday, the Treasury chief is scheduled to tour Arizona with House Speaker Mike Johnson to promote the administration's record ahead of the midterm elections. Although Bessent and Howard Lutnick were previously rivals in the race for the Treasury job, according to sources, after Lutnick failed to attend the cabinet meeting on Friday, Bessent briefed the Commerce Secretary on discussions about the US intervention in the yen. Bessent has made clear that he sees broader leverage in his bets on Argentina and Japan. In Argentina's case, he stressed last year that Milei's election victory helped consolidate a shift towards center-right parties in Latin America. Indeed, conservative leaders subsequently won consecutive presidential elections in Colombia and Peru. As for Japan, Bessent said on Tuesday that the yen's weakness poses a challenge not only to the country's inflation "problem" but also to many other Asian currencies. "If the yen significantly depreciates, then other currencies will also depreciate," he said.
Bessent has extensive experience with Japan. He has visited the country over 50 times, including three times as Treasury Secretary, and traveled there monthly in the early 2010s to better understand the situation on the ground. His former boss Soros made over $1 billion by betting on the yen's collapse when former Prime Minister Shinzo Abe pushed reforms aimed at reshaping Japan's economy with inflation. Bessent maintains a keen interest in Japan's economic affairs, coordinating closely with his counterparts, including Finance Minister Satsuki Katayama and Bank of Japan Governor Kazuo Ueda, whom Bessent has called an old friend of many years. While working for Soros, Bessent worked with renowned hedge fund trader Stanley Druckenmiller, who later became a mentor to current Federal Reserve Chairman Kevin Warsh. At his Senate confirmation hearing in April, Warsh endorsed the administration's "economic statecraft agenda," but did not specify the role he envisioned for the Fed. Bessent was less reserved. On Sunday and Tuesday, he again highlighted a Fed tool that could potentially help Japan intervene to support the yen without immediately selling a large portion of its over $1 trillion in Treasury holdings. Bessent said the Fed's Foreign and International Monetary Authorities Repo Facility (FIMA Repo Facility) "is a very powerful facility, and it was established precisely to deal with such situations."
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