The Trump administration’s decision to help Japan strengthen its yen doesn’t just hedge against higher US borrowing costs; it also aligns with the president’s trade agenda.
Weak Asian currencies encourage firms around the world to “keep their supply chains in Asia” rather than the US, the Council on Foreign Relations’ Brad Setser told Semafor.
“So if you care at all about … trade balance, a stronger yen and its derivative effects throughout Asia kind of help you.”
The rare move could also place additional pressure on the Japanese to make more concessions in its trade talks with the US, including more favorable terms for its investment arrangement.
One outstanding question: why Treasury Secretary Scott Bessent elected to use euros, not dollars, in what some analysts called a “maybe unprecedented step.”
Treasury did not immediately respond to a request for comment.