On July 31, a photo taken during a US Cabinet meeting at Camp David revealed a handwritten "to-do list" under the desk placard of US Treasury Secretary Scott Bessent, which included purchasing between $5 billion and $10 billion worth of Japanese yen.
The image, released by Reuters, suggests the United States may be "considering" direct intervention in the yen exchange rate. The Financial Times went further, explicitly stating that the US government has "already taken action."
Was the exposure of Bessent's note an accident or a deliberate leak? He Weiwen, a senior research fellow at the Center for China and Globalization and a standing council member of the China International Trade Association, argued that the note was intended to signal to the market that the US will not tolerate the yen's rapid depreciation. Historically, the US government has intervened in the yen before: first, through the 1985 Plaza Accord, where the US, UK, France, West Germany, and Japan jointly sold the US dollar and bought the yen to force a sharp appreciation; second, after Japan's March 2011 earthquake, G7 members, including the US, jointly sold the yen and bought the dollar to curb excessive yen appreciation.
The current "suspected or potential intervention" is directly driven by the yen's steep decline, with the dollar strengthening over 10% against the yen over the past year. The US aims to prevent speculative behavior in the foreign exchange market and avoid a subsequent sharp rebound in the yen that could trigger a sell-off of the dollar, negatively impacting the US economy. As of press time, the US Treasury has not commented on the leaked note. However, media reports indicate that on the night of July 30 and into July 31, before the note was exposed, the New York Federal Reserve, acting on behalf of the Treasury, inquired about actual yen trading quotes from major investment banks. This action is viewed as a "rate check" before implementing currency intervention.
Citing Japanese media reports, on July 30, the Japanese government and the Bank of Japan carried out foreign exchange intervention by buying the yen and selling the dollar. This suggests that if the US acts on Bessent's note, it would mark a coordinated effort by both Japan and the US to curb the yen's depreciation.
Can a joint US-Japan effort reverse the downward trend of the yen? He Weiwen noted that the $5 billion to $10 billion yen purchase indicated on the note is far too small in scale to be effective. The move is more about signaling US intolerance for the yen's sharp decline, aiming to "deter" market forces betting against the yen. Fundamentally, such rescue measures are "treating the symptoms, not the root cause." First, the interest rate differential between the US dollar and the yen is a key factor. The Federal Reserve's benchmark rate is currently 3.5% to 3.75%, while Japan's rate is only 1.0%. This wide gap is the core fundamental driver of the yen's persistent depreciation. Second, the impact of the Middle East situation. Amid the ongoing energy crisis, Japan's economy is more vulnerable than the US, putting greater pressure on the yen. Third, Japan's severe government debt, with a debt-to-GDP ratio of 230%. While US debt is also serious, the burden on Japan's economy is more pressing. If these underlying issues remain unresolved, any intervention measures will be temporary, and the yen's downtrend will be difficult to reverse.
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