Scott Bessent Criticizes Elizabeth Warren's Yen Intervention Questions

Treasury Secretary Scott Bessent launched a strong personal attack on Senator Elizabeth Warren, accusing her of misunderstanding foreign exchange markets. This occurred after Warren questioned a rare U.S. intervention in the Japanese yen.

"In her latest sciolistic letter to me, @SenWarren made it clear that she knows even less about foreign exchange markets than she does about banking," Bessent stated on X, referring to the ranking Democrat on the Senate banking committee. He offered to provide Warren and her staff with a lesson on "Foreign Exchange for Dummies" and criticized the media for not highlighting what he considered her "remedial error."

Senator Warren responded by highlighting recent challenges for the Treasury Secretary.

"Tough couple weeks for Sec. Bessent," Warren posted on X. "His effort to prop up a foreign currency hasn't worked. His failed intervention in Treasury markets was blasted by his mentor as burning 'two centuries' of credibility. Trump's economy is crushing families. Maybe he should focus on that."

Bessent's remarks were a reply to Warren's August 13 letter. In it, she requested details regarding the Treasury's decision to sell euros from its Exchange Stabilization Fund and buy yen. This action was taken after the Japanese currency dropped to a 40-year low.

According to Bessent, Warren's initial paragraph mistakenly implied that Japan owed money to the Treasury. She had written that "American taxpayers would ultimately bear the cost if Japan were unable to repay" the department.

"Treasury exchanged existing Exchange Stabilization Fund foreign-currency assets for yen," Bessent clarified in his Thursday response. "No new congressional appropriation was involved, and no credit was extended to Japan. Japan owes Treasury nothing."

Despite the opening phrasing, Warren's letter later accurately described the intervention as a sale of euros for yen, explicitly stating that Japan had not borrowed from the Treasury or the Federal Reserve.

Bessent defended the intervention as necessary to safeguard U.S. economic interests, asserting that a volatile yen could destabilize global markets and increase U.S. borrowing costs. However, his one-page response did not answer several of Warren's questions. Notably, Bessent did not reveal the amount of yen purchased by the Treasury, the exchange rate used, or the current value of the position. This is despite a Reuters photo from July 31 showing Bessent's notepad with the notation, "Buy Japanese Yen (JPY) $5-10 bil." He also did not state whether the European Central Bank was consulted prior to the euro sale or provide the detailed legal justification Warren sought.

This intervention was the first joint effort by the U.S. and Japan to strengthen the yen since 1998. Japanese Finance Ministry data released Friday shows that Japan spent 15.4 trillion yen, approximately $96.5 billion, to support its currency between July 30 and August 26, a record for that period.

A spokesperson for the Senate banking committee Democrats, Saloni Sharma, stated that Bessent "should focus ... on reducing the cost of living for the American families struggling in President Trump's economy," rather than engaging in "petty grievances with Senator Warren."

The Treasury Department did not immediately respond to a request for comment.