When Japan buys yen, it unwinds a dangerous trade

Illustration: Fortunate Joaquin

Aug 13th 2026|5 min read

AMERICA’S TREASURY secretary, Scott Bessent, is used to making audacious bets against central banks. He once worked for Soros Fund Management, the hedge fund famous for “breaking” the Bank of England during the sterling crisis of 1992. But in late July Mr Bessent bet the other way, lining up alongside a central bank in defence of its currency. He dipped into America’s foreign-exchange reserves to help the Bank of Japan (BoJ) buy yen, which had weakened past ¥163 to the dollar for the first time since 1986.