Aug 4 (Reuters) – The Trump administration will do “whatever it takes” to support Japan’s effort to stabilize its currency, Treasury Secretary Scott Bessent said on Tuesday.
“We will do whatever it takes to support them in a way that helps the American economy, the American taxpayer,” Bessent said in an interview on CNBC two days after confirming the Treasury had joined Japan’s finance authorities in an intervention last week to prop up the yen.
Bessent said the yen’s substantial undervaluation could trigger other economic problems or competitive devaluations of other currencies “which is unhealthy.”
The U.S. Treasury chief did not discuss the mechanics of U.S. participation in Friday’s joint intervention with Japan. He said that he was happy that the Japanese government wants to use a COVID-era Federal Reserve backstop for key central banks, the Foreign and International Monetary Authorities Repo Facility, which would allow the Bank of Japan to borrow up to $60 billion to support the yen.
“The FIMA facility was done in 2020, the size of the bond market was much smaller then, so I think it would be reasonable for the Fed to consider up-sizing the facility,” Bessent said, adding that its purpose was to “protect the U.S. economy and keep any volatility offshore.”
Regarding U.S. sales of euros to buy yen, Bessent said he was in close contact with European partners including central banks.
“I assured them that it was just a reallocation of our reserves. Seems to me the euro is much closer to an equilibrium price,” Bessent said. “I’m not going to talk about where the euro should or should not trade, but it’s really the substantial undervaluation of the yen here and the policies that the Takaichi government is putting in place to change that.”
Asked about the Reuters photo of his Friday “to do” list containing the words, “Buy Japanese yen (JPY) $5-10 bil.,” Bessent said: “I just wanted to make sure that all the reporters looking on over my shoulder also knew the symbol JPY for the Japanese yen.”
Bessent joked that he wanted to finish the list with items including, “go and have lunch with the (Iranian) supreme leader, play tennis with Putin, you know. But I thought I would just leave it at the buy five to 10 billion (dollars) of Japanese yen.”
(Reporting by Dan Burns, Doina Chiacu and David Lawder, Editing by Louise Heavens and Andrea Ricci )
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