Report published August 17, 2026
USD/JPY FX Intervention: Why Bessent Backs Yen Appreciation (ING Analysis)
Source and citation context
- Issuer
- ING
- Report date
- August 17, 2026
- Analysis as of
- Not stated in source
Authors / editors: Chris Turner (Lead Author)
Finvaulta summarizes ING's analysis. Attribute opinions, forecasts, time-sensitive values, and chronology to the issuer and report date; do not treat this page as an independent verification or a current market-data source.
US Treasury Secretary Scott Bessent is backing joint US-Japan FX intervention to reverse significant yen undervaluation, signaling that FX policy can mark cyclical turning points. Sustained yen strength will require faster BoJ tightening, domestic capital retention, and narrowing US-Japan rate differentials.
Key Takeaways
- 1.Joint US-Japan foreign exchange intervention in late July marks the first joint yen-buying operation since 1998, driven by US Treasury Secretary Scott Bessent's view that the yen is significantly undervalued.
- 2.ING's BEER fair-value model indicates the yen is over 20% undervalued against the US dollar in real terms, inconsistent with long-term economic fundamentals.
- 3.Durable yen appreciation will require fundamental shifts, including faster BoJ rate hikes (a September hike is ~75% priced) and higher domestic investment returns to stem offshore capital reinvestment.
Table of Contents
- Timing is everything
- USD/JPY strength inconsistent with economic fundamentals
- Policymakers can pick the turns
- Will Bessent be proved right?
- The link between investment returns and the yen
- Korean tax changes brought reinvested earnings home
- Author
- Disclaimer
Report data
USD/JPY strength inconsistent with economic fundamentals
| Metric | Estimate | Context |
|---|---|---|
| USD/JPY real overvaluation relative to BEER fair value model | 20.0% | ING's BEER model isolates fundamental economic drivers to demonstrate that USD/JPY is persistently overvalued. |
| Daily USD/JPY trading volume | 480.0 USD bn | Highlights the massive size of the daily USD/JPY trading market in contrast to official intervention scales. |
| Japan target public-private investment deployment | 370.0 JPY tr | Tokyo's new growth strategy target ($2.3tr equivalent) to enhance domestic productivity. |
| Overseas investment income reinvestment ratio for Japan | 46.0% | Portion of overseas investment income staying offshore as retained earnings. |
| Market implied probability of BoJ September interest rate hike | 75.0% | Market pricing for an accelerated Bank of Japan rate hike. |
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Authors / Editors
Reported Data Context
- USD/JPY real overvaluation relative to BEER fair value model: 20.0 % (2026) · Source: ING, Macrobond
- Japan target public-private investment deployment: 370.0 JPY tr (by 2040)
- Overseas investment income reinvestment ratio for Japan: 46.0 % · Source: Bank of Korea
- Market implied probability of BoJ September interest rate hike: 75.0 % (September 2026)
- USD/JPY forecast end-2026: 158.0 (End-2026) · Source: ING
Securities
Themes
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