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Odd Lots · August 6, 2026 · 42m

Brad Setser on the US's Unusual Japanese Yen Intervention

Brad Setser
Show Notes

The US recently joined forces with Japan to halt the yen's dramatic slide, marking the first joint currency intervention in 15 years. Treasury Secretary Scott Bessent employed unusual tactics: selling euros instead of dollars and tapping a little-known Federal Reserve repo facility. Brad Setser of the Council on Foreign Relations explains why the Bank of Japan initially held off on raising rates, the broad weakness in East Asian currencies, Japan's improving fiscal outlook, and what to expect going forward.

This summary was generated from show notes and public descriptions, not from a full transcript review. Details may contain inaccuracies.

Highlights

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Unorthodox Yen Intervention: Selling Euros and Using a Fed Repo Facility
Treasury Secretary Bessent chose to sell euros instead of dollars and utilized a little-known Federal Reserve repo facility to intervene in the yen.
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Why the Yen and East Asian Currencies Have Kept Weakening
Brad Setser explains that the Bank of Japan’s reluctance to raise rates, combined with broad pressure on East Asian currencies, drove the yen’s precipitous fall.
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Japan’s Improving Fiscal Outlook
Setser notes that Japan’s fiscal trajectory has been getting better, which may reduce its vulnerability to future currency attacks.
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