U.S. Treasury Secretary Scott Bessent declared the Bank of Japan (BoJ) is "behind the curve" on inflation, predicting imminent rate hikes that triggered a yen surge against major currencies including Bitcoin (BTC). Bessent stated during a Bloomberg TV interview: "The Japanese have an inflation problem... They're behind the curve, so they are going to be hiking, and they need to get their inflation problem under control." This contrasts with BoJ Governor Kazuo Ueda's cautious stance, who maintained the benchmark rate at 0.5% in July despite headline inflation exceeding 3%.
The yen appreciated 0.4% against the U.S. dollar, driving USD/JPY to a three-week low of 146.21. Bitcoin bore immediate impact: BitFlyer's BTC/JPY pair plunged 1.7% to 17,845,432 yen, while Coinbase's BTC/USD pair dropped to $121,650. Japan's equity indices fell 1%, and the MSCI Asia Pacific Index declined 0.2% amid the volatility.
Historically, yen rallies signal risk aversion as traders unwind carry trades (borrowing JPY to invest in higher-yielding assets). Marc Chandler of Bannockburn Global Forex noted reduced yen appeal for funding due to elevated volatility and competition from zero-rate Swiss francs. The U.S. Treasury has consistently pressured Japan to normalize policy, citing yen depreciation concerns in a June report advocating structural trade rebalancing.