U.S. Treasury Secretary Pushes for Iran's Economic Isolation at G20...Calls for Japan to Address Yen Weakness

Urges Countries to Join Sanctions, Presses China for Cooperation
"Japanese Government and BOJ Will Take Steps to Strengthen the Yen"

Scott Bessent, the US Secretary of the Treasury, has moved to strengthen international cooperation to isolate Iran from the global economy at the G20 Finance Ministers and Central Bank Governors Meeting. He also delivered a message regarding the recent weakness of the Japanese yen, suggesting that the Japanese government and the Bank of Japan (BOJ) will take measures to strengthen the yen.

Scott Bessent, US Secretary of the Treasury. Photo by Yonhap News

According to AP and other sources on August 31 (local time), Secretary Bessent requested cooperation on economic pressure against Iran as he met with financial authorities from various countries at the opening of the G20 Finance Ministers and Central Bank Governors Meeting in Asheville, North Carolina, USA.

In his opening remarks, Secretary Bessent identified boosting global economic growth and curbing the surge in debt as key topics for discussion at this meeting. However, with the US strengthening its strategy of economic isolation alongside military pressure during the prolonged war with Iran, international cooperation on sanctions against Iran has emerged as a core issue for this meeting.

When asked how long he believes the Iranian economy can hold out, he told reporters that it could be "within weeks or months." He added, "The economy doesn't have to collapse. We just need to bring the regime to its senses."

The European Union (EU) is also backing the US's campaign of economic pressure against Iran. Secretary Bessent stated that the EU is giving its "full support" to the US sanction efforts. The EU, for its part, welcomed additional economic pressure on Iran a day earlier and pledged to cooperate with the US and other partner countries.

However, the biggest variable in the US strategy of economically isolating Iran is China. China is Iran's largest trading partner and its biggest buyer of crude oil. After meeting with Pan Gongsheng, Governor of the People’s Bank of China, Secretary Bessent emphasized that "the US and China have more in common than differences" when it comes to the Iran issue. Both countries do not want Iran to acquire nuclear weapons, and they agree on the need to keep the Strait of Hormuz open for free passage of ships.

He also dismissed concerns that it would be difficult to truly isolate Iran without China's cooperation. According to the AP, Secretary Bessent stated that "all options are on the table" regarding sanctions related to China's purchases of Iranian crude oil. He rebutted assertions that the US is hesitant to impose sanctions out of consideration for its relationship with China, saying such claims are "completely incorrect."

Still, there are concerns that if secondary sanctions against China are fully implemented, tensions between the US and China could escalate once again, and this could shock global oil supplies. Nicholas Mulder, a sanctions expert at Cornell University, warned that sanctioning China’s major banks could trigger significant market disruption and provoke retaliation from China. He also pointed out that if oil trade is blocked and international oil prices rise further, inflationary pressure in the US could increase, which would be burdensome for the Trump administration.

Bessent: "Japanese Government and BOJ Will Take Steps to Strengthen Yen"

Yonhap News Agency

Secretary Bessent also sent a strong message regarding the yen’s weakness and Japanese monetary policy. In an interview with CNBC, when asked about the effect of last month's joint US-Japan intervention in the foreign exchange market, he said, "I cannot influence the market’s natural equilibrium," but added, "I have information that the market does not have, and I believe the Japanese government and the BOJ will take actions that will result in a stronger yen."

When asked whether such actions would mean an interest rate hike by the BOJ, he responded, "I think the market is currently pricing that in." Market participants interpreted this as supporting expectations that the BOJ will raise rates next month.

Following Secretary Bessent’s remarks, the yen strengthened against the dollar. The dollar-yen exchange rate declined to around 159.73 yen, but it was still close to the psychologically significant 160-yen-per-dollar level.

On July 31, the US and Japan took the unusual step of jointly intervening to buy yen in an effort to halt its sharp depreciation. However, with the yen continuing to weaken even afterward, market attention has shifted toward the possibility of a BOJ interest rate hike as a more effective response than direct foreign exchange intervention.

During this G20 period, Secretary Bessent is scheduled to meet separately with BOJ Governor Kazuo Ueda. However, he said he does not view the recent movements of the yen as disorderly and drew a line against the possibility of the US and Japan conducting additional joint interventions for now.

This content was produced with the assistance of AI translation services.