"Buyer’s mindset" takes over the Treasury! Bessent utilizes euros and reveals his notebook, restructuring US foreign exchange intervention strategy with hedge fund tactics

Bessent wants to help Japan bolster its national currency. So, he decided to let the media “catch a glimpse” of his notebook, where one of the to-do items was prominently marked: buying up to $10 billion worth of yen.

Odaily Star Daily noticed that this is an extraordinary tactic, but it has become Bessent’s trademark style. Early in his Wall Street career, while working for George Soros, he earned $1 billion by making bold bets on currency rates. As Trump’s Treasury Secretary, he launched a high-risk rescue plan for Argentina. Now, he’s extending a helping hand to save another American ally.

The joint action by Washington and Tokyo to boost the yen is the first in nearly thirty years. In addition to the “notebook strategy,” Bessent has used a range of tools that surprised some Treasury watchers, such as tapping U.S.-held euros and publicizing a Federal Reserve mechanism available to Japan.

Stephen Myrow, managing partner at Beacon Policy Advisors and a former Treasury official during the George W. Bush administration, said, “I think his way of thinking is more like: ‘Well, if I were still a trader, this would be a pretty good play,’” adding, “He’s very comfortable with cross-border operations, because his boundaries aren’t the traditional Treasury boundaries. What he values is market credibility.”

Initial results have been encouraging, with the intervention helping the Japanese currency rebound from a forty-year low. However, as traders focus on the sustainability of that rebound, Bessent signaled further action on Tuesday. He noted that yen weakness increases the risk of broader currency depreciation across Asia.

If these strategies signal a more proactive approach to economic diplomacy, it may be due to the professional background of this Treasury chief. Most recent predecessors, like former Goldman Sachs executives Henry Paulson and Robert Rubin, come from the so-called financial sell side, where risk management is a core concern.

Bessent, with his decades-long hedge fund career, is a stark contrast.

Myrow said, “We’ve never really had someone from the buy side in this role,” “His actions are more like those of a macro trader than a traditional Treasury Secretary.”

In a speech to the Economic Club of New York in June, Bessent laid out his economic governance philosophy. In practice, this involves supporting countries willing to “cooperate” with Washington.

U.S. Benefits

Commenting on yen intervention on Sunday, Trump said the United States would see “economic benefit,” but did not specify what that would be. Bessent expressed concern about spillover effects from Japanese markets to the U.S. Treasury market. Both also invoked the importance of the U.S.-Japan alliance.

In a post on Platform X on Sunday confirming joint intervention to support the yen, Bessent wrote, “The Trump administration is delivering on its promises to America’s trusted partners.” Prior to this intervention, he had effectively shown reporters his notebook during a cabinet meeting on Friday, with buying yen listed as a “to-do” item.

Bessent said in the media on Tuesday, “I just want to make sure that all the reporters looking over my shoulder also know that ‘JPY’ is the code for Japanese yen,” at the same time confirming that the U.S. had deployed euros, which analysts suspect was aimed at limiting downward pressure on the dollar.

Hedge fund traders enjoy the luxury of closing out their positions immediately after a successful bet, which isn’t necessarily the case for a Treasury Secretary. Last year’s bet on Argentina paid off after Trump ally President Javier Milei pulled off a surprise win in legislative elections.

Now, Bessent has tied some of his own credibility to the yen, which has long been vulnerable to investors’ concerns about Japanese fiscal policy and the Bank of Japan’s slow pace of rate hikes.

ING’s Global Markets Head, Chris Turner, said about Bessent’s use of the Treasury’s Exchange Stabilization Fund (ESF), “Linking the Argentina and Japan events shows that the Treasury is increasingly willing to use the ESF to support broader economic and geopolitical goals.”

Turner said, “This marks a significant shift from the relatively passive stance that shaped U.S. foreign exchange policy for much of the past two decades.”

Bessent is able to wield considerable influence and take risks within the Trump administration. Tuesday provided a potential example: as Bessent presided over the swearing-in of new Director of National Intelligence Jay Clayton, Trump watched from the sidelines. On Wednesday, this Treasury chief is scheduled to visit Arizona with House Speaker Mike Johnson to tout the administration’s achievements ahead of the midterm elections.

Although Bessent and Howard Lutnick previously competed for the Treasury post, sources say that after Lutnick was unable to attend Friday’s cabinet meeting, Bessent briefed the Commerce Secretary on U.S. yen intervention discussions.

Bessent has made it clear he sees broader leverage at play in his bets on Argentina and Japan. In Argentina’s case, he stressed last year that Milei’s electoral victory helped cement a shift in Latin America towards center-right parties. In fact, conservative leaders subsequently won presidential elections in Colombia and Peru.

As for Japan, Bessent said on Tuesday that yen weakness not only challenges the country’s inflation “problem,” but also poses a risk to several other Asian currencies. “If the yen depreciates sharply, other currencies will follow,” he said.

“Japan Expert”

Bessent has extensive experience with Japan. He has visited the country more than 50 times, including three visits as Treasury Secretary, and during the early 2010s traveled back and forth monthly to get a better on-the-ground understanding. His former boss, Soros, made over a billion dollars betting on a yen plunge during former Prime Minister Shinzo Abe’s campaign to reflate Japan’s economy with reforms aimed at stoking inflation.

Bessent maintains a strong interest in Japanese economic affairs, coordinating closely with counterparts including Finance Minister Kazuki Katayama and Bank of Japan Governor Kazuo Ueda, whom Bessent calls a longtime friend.

While working for Soros, Bessent worked with renowned hedge fund trader Stanley Druckenmiller, who later became a mentor to current Federal Reserve Chair Kevin Warsh.

At the Senate confirmation hearing in April, Warsh endorsed the administration’s “economic governance agenda,” without specifying the Fed’s envisioned role at the time.

Bessent is less reserved. On Sunday and again on Tuesday, he highlighted a U.S. central bank tool that could potentially help Japan intervene to support the yen without immediately having to sell a significant portion of its more than $1 trillion in government bond reserves.

Bessent stated that the Federal Reserve’s “Foreign and International Monetary Authorities Repo Facility” (FIMA Repo Facility) “is an extremely powerful facility, and it was created specifically for situations like this.”