Power Players: Why does Trump care about the Japanese yen?

**Rahul Tandon** (0:00)
Now, it's not often that we get to see the to-do list of one of the most powerful men in global finance, but a couple of days ago, we did. I'm talking about Scott Besson, the US Treasury Secretary. He was in a cabinet meeting on Friday, and a photographer snapped a shot of what was on Besson's notepad. On the table in front of him, a handwritten note said, to do, buy Japanese yen, $5 to $10 billion. And sure enough, the US Treasury did buy yen later that day. It's an unusual event. What is going on? Why is the US buying yen? What does Japan get out of it? What does the US get out of it? And for you listening at home, why should you care?
Yes, that's today's episode of Power Players from Business Daily. I'm Rahul Tandon here in a studio in the UK.

**Will Bain** (0:50)
And I'm Will Bain, back with Rahul, as always here on the programme.

**Rahul Tandon** (0:53)
And to help us pick through this story, we're joined by an old friend. And we don't mean she's old, but we've known her as a friend for a long time. Mariko Oi, you will have heard her many times here, of course, now is Asia specific podcast host from Singapore. She was a business reporter for many years. And you have a nickname, don't you, Mariko? Go on, tell everybody what it is.

**Mariko Oi** (1:14)
The BBC's Japanese Yen Geek. And I think one producer actually would put that on my name title on TV. So that made me really, really happy.

**Rahul Tandon** (1:25)
Well, you know what? With that nickname, you are the perfect person this week.
A quick one before we get into it, to do lists. I've got to be honest, Will would know this, Mariko, I'm so disorganized. I don't do to do lists because when I do them, I just lose them anyway. What about you two?

**Mariko Oi** (1:40)
I'm like this OCD kid who's got like a list of things in my head that I need to go through. I think 90% of them would be like kids related, new shoes because they're growing out or arrange a birthday present for someone's kids and all that kind of stuff.

**Will Bain** (1:56)
I actually feel a little bit for Scott Besson this week, guys, because my wife is away for work at the moment and I reckon there are to-do lists in just about every room in my house and all of them involved me spending some money on something. So I feel like I feel for him. Not 10 billion on Japanese yen, I hasten to add, but certainly I feel for the Treasury Secretary on that.

**Rahul Tandon** (2:13)
Right. Let us start with what has actually happened over the past week because this is such a rare event within the financial markets. So both of you, what has happened?

**Mariko Oi** (2:26)
When we heard that there was this coordinated intervention between the US and Japan, that's what got my attention because I've been covering the Japanese currency for about 21 years and I'm old enough to remember the last coordinated intervention that was in 2011 And it was a bizarre situation where the country was battling the biggest earthquake on record. And yet because the currency was seen as a safe haven currency, it was strengthening like crazy. So it wasn't just the US, but G7 economies got together and tried to weaken the currency. That was 15 years ago. This time around, the yen is so weak that the US and Japan work together to prop up the value of the Japanese currency.

**Will Bain** (3:06)
As Mariko says, it's pretty rare that 2011 one was sort of going the opposite way. 1998, Bill Clinton was the president. The last time they intervened to prop up the yen. We won't go really technically deep, Rahul, into quite how and why they did it, but it sort of involved a mixture of the US buying some yen using euros rather than the dollar and also allowing Japan to basically, and I'm massively oversimplifying here, allow to swap some of the US government debt it owns. So those bonds that we've talked about so many times here on Business Daily, just swap those for dollars for a period of time and then they can swap them back again with the US Central Bank, the Federal Reserve down the track, all to try and, as Mariko says, prop up that sort of falling yen value.

**Rahul Tandon** (3:46)
Yeah, and I think that this is really important, isn't it? Because often, we will see sometimes countries trying to protect their own currencies, but it is so rare for another country, particularly the world's biggest economy, to come in and say, hey, we're going to give you a hand. So it's extremely, extremely rare. Were you surprised when you've been covering Japan for so long, you know, our yen geek, Mariko, when you heard this was out, I had spoken to some people who I know were involved in trading on Friday as this was beginning to filter through, and they were pretty shocked by it.