Japan’s 10-year government bond yield has risen to its highest level in three decades, after US Treasury Secretary Scott Bessent signalled that Tokyo and the Bank of Japan should take steps to support the weakening yen.
The benchmark yield climbed six basis points on Tuesday to slightly above 3 per cent, its highest level since 1996, as Japanese bonds came under renewed pressure. Bond yields rise as prices fall.
The move came amid a broader increase in global borrowing costs, with government bond yields reaching multi-decade highs across several major economies. Renewed military hostilities between the United States and Iran over the weekend have also heightened concerns about inflation and the potential impact of higher energy prices.
The yen was trading around 160.1 to the dollar, breaching the 160 level for a third consecutive session. The level is closely watched by markets because a sustained move beyond it could increase the likelihood of further currency intervention by Japanese authorities.
The United States and Japan carried out a rare joint intervention to support the yen in late July, but the currency has since given up much of its gains.
Speaking to CNBC on Monday, Bessent said he expected the Japanese government and the Bank of Japan to take measures that would strengthen the yen.
“I have information that the market doesn’t have. And it’s my belief that the Japanese government and that the BOJ will do the things that will lead to a stronger yen,” Bessent said.
A US official also told Japan’s NHK that Bessent had stressed the need for Tokyo to communicate its path towards fiscal sustainability and pursue interest-rate increases during separate meetings with Finance Minister Satsuki Katayama and Bank of Japan Governor Kazuo Ueda.
Katayama said Japan and the United States had agreed to continue coordinating efforts to promote orderly movements in the yen and maintain global financial stability.
She added that both countries remained prepared to respond to disorderly movements in currency markets.
The yen’s prolonged decline has become an increasing concern for Japanese authorities because a weaker currency raises the cost of imported goods and puts additional pressure on consumer prices.
The developments also place renewed focus on the Bank of Japan’s interest-rate policy, as markets assess whether the central bank could tighten monetary conditions further to support the yen and contain inflationary pressures.
Boluwatife Enome
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