Bessent is not one dimensional--the driving fundamental in 22/24 was the carry trade during times of interest rate chaos---coming to the end of the predominance of carry so a different fundamental may be of greater interest----Germany was a clssic example last Thursday as the BUND rose 30 basis points and the DAX rallied 4%
a US admin decided the YEN was weak because of the carry trade and acted to intervene to strengthen the YEN---will Bessent act similar to Rubin and buy YEN forcing out the carry trades and thus not moving to enact Tariffs
Currency interventions only work in times when a currency's value is way out of whack with fundamentals because markets have overshot. Intervention can correct that. When a currency is getting weaker because of fundamentals, intervention is useless. Japan tried it in 2022 and 2024, and it failed. Trump is going for tariffs. https://richardkatz.substack.com/p/would-yen-intervention-succeed?utm_source=publication-search
Interesting that you leave out the period of May-OCT of 1998 when the YEN went thru various gyrations as Secretary Rubin intervened to drive the YEN higher at the behest of the Chinese as President Clinton was on his way to Beijing.The initial effort to sterngthen the YEN failed failed as the famous/fabulous carry -traders came back to push the YEN lower .Butthe DLR/YEN which made a high of 147.60 in August,1998 did finally begin to rallyand made its way to 100 yen to the dollar over the next 15 months as the Asian contagion and Russian meltdowns subsided and the world economy strngthened into the Y2K problem.
Bessent is not one dimensional--the driving fundamental in 22/24 was the carry trade during times of interest rate chaos---coming to the end of the predominance of carry so a different fundamental may be of greater interest----Germany was a clssic example last Thursday as the BUND rose 30 basis points and the DAX rallied 4%
a US admin decided the YEN was weak because of the carry trade and acted to intervene to strengthen the YEN---will Bessent act similar to Rubin and buy YEN forcing out the carry trades and thus not moving to enact Tariffs
Currency interventions only work in times when a currency's value is way out of whack with fundamentals because markets have overshot. Intervention can correct that. When a currency is getting weaker because of fundamentals, intervention is useless. Japan tried it in 2022 and 2024, and it failed. Trump is going for tariffs. https://richardkatz.substack.com/p/would-yen-intervention-succeed?utm_source=publication-search
Interesting that you leave out the period of May-OCT of 1998 when the YEN went thru various gyrations as Secretary Rubin intervened to drive the YEN higher at the behest of the Chinese as President Clinton was on his way to Beijing.The initial effort to sterngthen the YEN failed failed as the famous/fabulous carry -traders came back to push the YEN lower .Butthe DLR/YEN which made a high of 147.60 in August,1998 did finally begin to rallyand made its way to 100 yen to the dollar over the next 15 months as the Asian contagion and Russian meltdowns subsided and the world economy strngthened into the Y2K problem.
I don't understand the revelance