Trump Treasury’s first forex intervention in over a decade draws sharp scrutiny from analysts

The US Treasury Department just did something it hasn’t done in over a decade. On August 1, it stepped directly into foreign exchange markets, buying Japanese yen in a coordinated operation with Tokyo that marked the first American forex intervention since the G7’s 2011 effort to stabilize the yen after Japan’s earthquake and tsunami. It was also the first time the US had bought yen since 1998. What actually happened Treasury Secretary Scott Bessent, the former hedge-fund manager, authorized the purchase of yen using an estimated $5-10 billion in funds. The money came from euro sales routed through the Federal Reserve’s FIMA facility, a mechanism that lets foreign central banks swap their holdings with the Fed. Japan, for its part, went considerably bigger. Tokyo’s total yen purchases on the day reached approximately $36 billion, dwarfing the American contribution. The trigger was the yen’s slide to a 40-year low against the dollar, approaching 164 yen per dollar. Bessent justified the move by pointing to what he called “disorderly yen movements” driven by substantial undervaluation. The immediate effect was measurable. The dollar dropped as much as 1% against the yen, falling to a...