Treasury Secretary Scott Bessent stated that the weak yen contributes to inflation in Japan and raises the risk of a broader decline in Asian currencies, reaffirming US support for efforts to stabilize the situation.
“It is the level of the yen that can provoke other problems or competitive devaluations, which is an unhealthy phenomenon,” Scott Bessent said on CNBC on Tuesday. He added that “a stable yen is important not only for the US but for the entire Asian region.”
His comments came just days after the US joined Japan in a currency intervention to support the yen, which has recently fallen to its lowest level against the dollar in four decades.
US support and risks for the region
When asked whether the US would engage in further interventions, Scott Bessent replied that “we are in close contact” with Tokyo and “will do everything possible to support them in a way that helps the American economy, taxpayers, and stabilizes the global economy.”
According to the head of the US Treasury Department, one factor contributing to inflation in Japan is the weak yen, which drives up the cost of imported energy. He also noted that “if the yen weakens significantly, other Asian currencies may follow.”
Scott Bessent also highlighted the excessive volatility of the South Korean won and remarked that “many believe that the Chinese yuan (RMB) is undervalued.” RMB (renminbi) is the official name of China’s currency.
Source: Bloomberg
