Bessent-Warren feud erupts over yen intervention, Treasury warns of higher U.S. borrowing costs

Treasury Secretary Scott Bessent and Senator Elizabeth Warren clashed publicly this week over the Trump administration’s decision to intervene jointly with Japan to prop up the yen, with Bessent warning that disorderly currency markets could ultimately raise borrowing costs for American households.

In a letter dated August 27 and posted on social media, Bessent responded to an August 13 inquiry from Warren, the ranking Democrat on the Senate Banking Committee, about the Treasury’s use of the Exchange Stabilization Fund to buy yen alongside Japanese authorities at the end of July. The intervention came as the yen hovered near a 40-year low against the U.S. dollar and marked the first joint yen-buying operation by the two countries since 1998.

“Japan is a major holder of U.S. Treasuries. It is also a critical trading partner and a treaty ally. Disorderly yen markets can trigger forced unwinds,” Bessent wrote, according to a report by Kyodo News. He added that excessive yen depreciation could “destabilize global markets and ultimately raise borrowing costs for American families and businesses.”

Bessent told Warren the Treasury Department swapped existing foreign-currency assets within the Exchange Stabilization Fund for yen, without revealing the scale of the purchases. He emphasized that the operation extended no credit to Japan. “Japan owes the Treasury nothing,” he said, arguing there was no debt that could go unpaid.

The response opened with a personal jab, as reported by Meaww.com. Bessent told Warren that her letter showed she knew “even less about foreign exchange markets” than she did about banking, and offered to give her a “Foreign Exchange for Dummies” tutorial. He also criticized what he called the “media mob” for failing to understand the transaction.

Warren’s original letter had demanded details on the legal basis, cost, and potential risks of the intervention. She also pointed to the Treasury’s earlier use of the Exchange Stabilization Fund to support Argentina’s peso under President Javier Milei—an operation she had previously described as a politically driven, taxpayer-backed bailout. The Treasury has said it made money on the Argentina intervention, though it has not publicly released full details.

Bessent defended the fund’s use, writing that federal law authorizes the Treasury secretary, with presidential approval, to deal in foreign exchange “in support of orderly exchange arrangements.”

Warren fired back on social media, escalating the dispute. “Tough couple weeks for Sec. Bessent. His effort to prop up a foreign currency hasn’t worked,” she posted, according to Meaww.com. She cited criticism from billionaire investor Stanley Druckenmiller, Bessent’s former mentor and colleague from his years at George Soros’s investment firm. Druckenmiller had recently criticized Bessent’s broader market interventions, warning that efforts to suppress borrowing costs were unlikely to succeed and arguing that reducing the federal deficit would be a better approach.

“Trump’s economy is crushing families,” Warren added. “Maybe he should focus on that.”

Despite the joint operation, the yen has lost some of its gains in recent days. On Friday, it briefly weakened beyond 160 to the dollar for the first time since the intervention, according to Kyodo News.

The clash puts renewed attention on the real-economy stakes of global currency moves. Bessent’s letter argued that turmoil in Japan could force market disruptions that push up borrowing costs for American families and businesses. Warren, meanwhile, is demanding greater accountability over how Treasury resources are deployed—both for Japan and in other overseas operations such as the Argentina peso support.

The Treasury has not disclosed the exact amount of yen purchased during the intervention. Bessent noted in the letter that the operation used existing foreign-currency assets, not fresh taxpayer money, and that the legal framework authorizes such actions with presidential approval.