| Its trades went through Goldman Sachs and Morgan Stanley, and the yen is back near 157. |
| LEAD ESSAY / 4 MIN / 3 DOCUMENTS / STORY FILE YEN-INT |
|
| Would you spend $98 billion on a trade that held for about four weeks? |
| Japan did. From July 30 to August 26, its Ministry of Finance spent a record ¥15.4 trillion buying yen. That's close to $98 billion, and it has a name: a currency intervention. In plain English, a government trades in the open market to make its own money worth more. |
| Washington joined in on July 31, its first yen purchase since 1998. I've been reading the paperwork ever since... because part of the money came out of a public account. |
| Let me walk you through what the documents say, and what they leave out. |
|
Goldman Sachs and Morgan Stanley took the order |
|
| Start with the mechanics. The New York Fed acted for the Treasury and sold euros from the Exchange Stabilization Fund. This is a Treasury account set up in 1934 for currency deals. With the president's approval, the Treasury secretary can use it without asking Congress. Next, the Fed used those euros to buy yen. Senator Elizabeth Warren's August 13 letter names the two banks that carried out the trades: Goldman Sachs and Morgan Stanley. |
| You'd expect a purchase like that to come with a receipt. Reuters photographed Treasury Secretary Scott Bessent's notepad at a Camp David cabinet meeting that same day. It read "Buy Japanese Yen (JPY) $5-10 bil." But Treasury has never confirmed that figure, or any other. |
|
|
| His August 27 reply to Warren said exactly that, and he's right. So no vote was needed and no vote was held. And to this day, no total has been published. |
|
Warren's August 13 letter asked for the cost |
|
| She sent it with five questions and an August 28 deadline. I read it twice. Question three is the one that matters to you: "What is the expected cost to the U.S. taxpayer?" |
| FILED / WARREN LETTER TO BESSENT |
|
| Elizabeth Warren tells Treasury Secretary Scott Bessent that the administration hasn't disclosed what it spent on yen. Her letter says the New York Fed sold euros for yen through Goldman Sachs and Morgan Stanley. Five questions follow, including the expected cost to taxpayers, with answers due August 28. |
|
| Bessent met that deadline. He called her letter "sciolistic," a fancy word for shallow... but he left out the dollar figure. |
| So I went looking for it. An FXStreet analysis of weekly US reserve reports puts the American purchase at about $500 million. If that's close, Washington paid about half of one percent of what Tokyo spent. And it's a long way from the $5 to $10 billion on the notepad. |
|
157 yen to the dollar, again |
|
| Now look at what the money bought. On July 31 the yen jumped to 157.40 per dollar. But by August 28 the dollar was back above 160 yen. And on Monday the yen traded near 157 again, about where the July 31 trades left it. |
| Even the Fed's own September meeting minutes, released October 7, stop at two facts. Treasury money paid for the trades, and the Fed's own portfolio wasn't involved. You won't find a dollar amount anywhere in them. |
| So who got paid? Two banks, Goldman Sachs and Morgan Stanley, got the government's business. Traders who sold yen into the July 31 jump could buy it back cheaper by late August. And Japanese families keep paying more for imported fuel and food, because a weak yen buys less. |
| Here's why this is your fight too. Of all foreign countries, Japan holds the most US government debt. When Tokyo needs dollars, it can sell those Treasurys. Selling them can raise the rates on your mortgage and your car loan. Rising rates are the risk Bessent cites for stepping in. As I write, the 10-year Treasury yield sits near 5%. |
| Maybe the trade was worth it. But you can't judge that without the number. Rates get decided at the Fed today and at the Bank of Japan on Friday. After that comes the New York Fed's quarterly report on Treasury currency trades. It's the first official report expected to show what Washington spent... and I'll read it the day it's out, because the account that paid for this is public money. |
