Bessent cites won's volatility while stressing importance of yen's stability

U.S. Treasury Secretary Scott Bessent said on Tuesday that Korea’s currency has experienced “excess volatility” as he underscored the importance of a stable yen for the “entire region” following a recent intervention by the United States and Japan to boost the Japanese currency.

Bessent made the remarks in a CNBC interview after Washington and Tokyo jointly intervened in the foreign exchange market last week in a rare move to help address the yen’s sharp fall against the greenback.

“I think a stable yen is not only important for the [United States], but it’s very important for the entire region because if the yen were to weaken substantially, then the other currencies would follow it,” he said in the interview.

“You know, we’d seen excess volatility in the Korean won,” he added.

Casting himself as an economic historian, Bessent said that, in his view, the 1997 Asian financial crisis was partially triggered by an “overly weak” yen.

Bessent’s remarks on the Korean currency appear to reflect U.S. concerns about the won’s volatility, with speculation emerging that the instability could complicate Seoul’s efforts to execute its $350 billion investment commitment in the United States under last year’s trade deal.

In January, when the won depreciated, the secretary noted that the depreciation was “not in line with Korea’s strong economic fundamentals” — a remark that observers said amounted to a verbal intervention following concerns that the won's weakness could affect Korean businesses’ investment plans in the United States.

Commenting on recent market intervention during the CNBC interview, the secretary voiced his hope that the “right policies” in Japan will lead the yen to return to a “more normal equilibrium price” level.

He also said that a stable yen is crucial, given Japan’s trade flows, the size of its economy and its contribution to the global savings market.

“The Japanese government understands that, and we are proud to stand with them in implementing their policies and help them stabilize the region,” he said.

Asked about the possibility of additional currency intervention, Bessent said that Washington is in “close” and “constant” communication with Tokyo, and that it will “do whatever it takes” to support Japan “in a way that helps the American economy, the American taxpayer and stabilize the global economy.”

Touching on the “carry trade,” a strategy in which investors borrow money in yen or other low-interest currencies and invest it in high-yielding ones to profit from the interest gap, he predicted that the carry trade will not go away entirely.

“Japan has a gigantic surplus of foreign assets, and they provide liquidity to the rest of the world. Japan Inc. — since the ’70s, ’80s, all through the ’90s up until now — has accumulated substantial overseas assets, and I see no reason for that to stop,” he said.

“It’s just the level of the yen that could trigger other problems or trigger competitive devaluations, which is unhealthy.”

Yonhap