US Treasury Secretary Scott Bessent has led an emergency rescue of the Japanese yen, days after the currency sank to a historic low against the dollar on July 29. The United States and Japan poured billions of dollars into foreign exchange markets to prop up the yen, in a rare intervention that broke with the usual practice of central banks only stepping in when there is "disorderly" selling.
Bessent's role marks a striking reversal. In 1992, as a hedge fund trader working for George Soros, he bet against the pound's survival inside the European Exchange Rate Mechanism, a wager that helped force sterling out of the system that September.
Britain has its own history of turbulent Augusts in currency markets. During the heatwave of 1976, the pound came under such severe selling pressure that the Bank of England exhausted its reserves trying to defend it, forcing the government to seek a rescue from the International Monetary Fund that October. In 1992 the Bank fought another losing battle to keep the pound inside the Exchange Rate Mechanism before sterling was ejected in September.
Washington's decision to intervene this time was driven by fears that the Bank of Japan's key interest rate of 1 per cent was too low to keep inflation in check, and that an unchecked slide in the yen risked a broader market meltdown, even though no emergency was evident at the time.
Fears over Japan's Treasury holdings
A central concern in Washington was that Japan, the world's biggest holder of US government debt, might sell American Treasury bonds to support its own currency. That could push up yields on US Treasuries and raise American borrowing costs.
Officials were also worried that a yen under siege could spread to South Korea and spark a broader Asian financial collapse similar to the one seen in 1997.
Bessent's determination to help was revealed inadvertently when a Reuters photographer captured him holding a piece of paper on which he had scrawled a yen symbol alongside the figures "$5billion to $10billion".
The operation was also unusual because the Americans used euro reserves rather than dollars, largely to avoid triggering panic in the bond markets. A stronger yen also made Japanese goods more expensive for American buyers, helping to narrow the US trade deficit.
Currency intervention as a political tool
Bessent, backed by the White House, treats currency intervention as a political instrument. In October 2025 the administration bought Argentine pesos to support the radical economic and monetary reforms pushed through by Argentina's President Javier Milei, an ally of President Trump.
The administration is now pressing the Federal Reserve to increase its Foreign and International Monetary Authorities facility to $60billion, giving it more firepower for future currency market operations.
Bessent, the sterling poacher of 1992, has become the yen's gamekeeper.
BP's profits draw criticism
Separately, oil major BP has faced a backlash from environmental campaigners after posting second-quarter profits of $5.7billion. Campaign group Global Witness invoked President Trump's own "drill, baby, drill" mantra, noting that he had recently called on big oil companies to rein in their profiteering.
BP, which runs a large and sophisticated trading arm, has benefited from price volatility caused by Trump's frequent social media posts about his on-off conflict in the Middle East.
BP's boardroom turmoil
The company has been through its own upheaval, employing three chief executives in two years and two permanent chairmen, with the chairman's post vacant since Albert Manifold was ousted in a boardroom coup in May.
Chief executive Meg O'Neill sounded like a football manager under pressure when she told a CNBC interviewer: "I have the full support of the board."
BP's decision last week to pull out of the North Sea after 60 years is a political embarrassment for Prime Minister Andy Burnham's government as it considers whether to authorise new drilling.
O'Neill defends North Sea record
O'Neill's focus on what she calls BP's "high-grade" assets is at least a plan after a period of confusion at the top of the company.
O'Neill also praised North Sea production, saying the UK "should be using domestic resources first instead of buying from a third party." The remark sits awkwardly alongside BP's own retreat from the North Sea.
