Symbolic, in sync: Bessent hails yen-boosting joint action between US, JapanーNHK WORLD-JAPAN NEWS

NHK WORLD-JAPAN

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Video Summary

The U.S. Treasury signals strong support for Japanese economic policies, emphasizing a coordinated intervention as a symbol of confidence in the "Takaichi-nomics" era. This move aims to stabilize the yen, which, if excessively weak, could destabilize the broader Asian and global economies, drawing parallels to the 1990s Asian financial crisis.

While acknowledging the success of "Abenomics," the Treasury official believes Japan has successfully exited deflation and boasts a robust economy. The focus now shifts to ensuring the yen maintains its value, with the U.S. Treasury expressing confidence in the Bank of Japan's ability to manage interest rates and achieve a virtuous cycle of economic stability, despite the ongoing gap between U.S. and Japanese rates.

Short Highlights

Coordinated intervention signals U.S. confidence in Japanese policies.
Excessive yen weakness could harm the Asian and global economies.
"Abenomics" deemed a success, moving into a new phase.
U.S. Treasury confident in Bank of Japan's management of rates.
U.S. and Japan aligned on JGBs as safe assets.

Key Details

U.S. Joins Historic Intervention to Stabilize Yen [0:00]

The U.S. joined a coordinated intervention with Japan as a symbol of confidence in the "Takaichi-nomics" government.
The objective was to signal that U.S. policies will lead to long-term yen strengthening.
Excess volatility and undue yen weakness are seen as harmful to the Asian and global economies.

"The U.S. wanted to join with our great Japanese allies to show that we think that the Takeichi government has the right policies that will lead to long-term yen strengthening, and we believe that excess volatility and undue yen strength could hurt, indeed, the Asia region and the entire global economy."

Lessons from Past Crises Inform Policy [0:47]

A weaker yen and stronger dollar could have negative consequences for the U.S. economy.
Historical parallels are drawn to the Asian financial crisis in the mid-90s, where substantial yen weakness was a trigger.
Japan's significant role in global capital and trade flows makes yen stability crucial.

"Well, we have a strong dollar policy, but when I look back, the only good thing about being 63 is I've been in the markets a long time, and I remember the Asian financial crisis in the mid-90s, and one of the triggers for that was substantial yen weakness."

"Abenomics" Success and Transition to "Takaichi-nomics" [1:31]

"Abenomics" is described as a fantastic success over the past 14 years.
The current phase is seen as a transition, perhaps to "Takaichi-nomics."
Japan is believed to have successfully lifted itself out of deflation and possesses one of the world's strongest economies.

"I believe the past 14 years have been a success. And I think we're moving into a new phase, maybe Takaichi-nomics. And I believe that the Prime Minister understands that this is a less reflationary phase and that Japan has successfully lifted itself out of deflation and has one of the strongest economies in the world."

Confidence in Bank of Japan and Fed Leadership [2:15]

The U.S. official expresses confidence in Governor Ueda of the Bank of Japan and Fed Chair Worf.
They believe Ueda will do what is best for the Japanese economy, which is vital globally.
The Fed Chair is trusted to balance the dual mandate of employment and inflation, with current inflation seen as temporary due to energy shocks.

"Again, I am sure that Governor Ueda will do what is best for the Japanese economy. And the Japanese economy is very important for the world economy."