Dollar, Yen, and Won: Are the Rules of the Game Changing?

"I am the owner of this casino right now. You want to place your bet against the direction I am pointing? Go ahead and try." This is what Scott Bessent, the financial commander-in-chief of the Trump administration, threw into the foreign exchange market this week. He is blatantly sending the message, "Do you really think you can win by rebelling against the U.S. government?" He is saying that if the U.S. wants the yen to appreciate, the yen will appreciate.

Lately, the U.S. government, led by Treasury Secretary Bessent, has been intervening in the foreign exchange and bond markets to engage in a battle of wits with the market. Even after the U.S. engaged in direct purchases of the yen for the first time in nearly 30 years, the flow betting on a "decline in the value of the yen" did not stop. In response, Bessent implicitly hinted that "the U.S. government already knows the future moves of the Bank of Japan," flaunting his blatant "connection" with Japanese authorities. When the U.S. national debt exceeded 40 trillion dollars for the first time in history, the government expanded long-term bond buybacks, "pointing out" that "the market is wrong, not the U.S. government." Looking at the flow of the foreign exchange market in early September, it at first glance appears to be moving according to Bessent's wishes. But will this flow really continue like this? And how will the U.S. efforts act upon the value of our currency, the won, which grew rapidly more expensive throughout the summer, and the capital market?

However, there is one thing to consider. Why would someone who is as high-ranking as the U.S. Treasury Secretary make such provocative remarks as, "I am the owner of this casino!"? Paradoxically, this suggests that the problems facing the U.S. are just that serious. It means that the world's money is not moving smoothly in the direction the U.S. government wants to take it. U.S. Treasury Secretary Scott Bessent is currently executing multiple tricky operations at the same time for the smooth sailing of the U.S. economy, which is sitting on a massive pile of debt. "I am the owner of this casino!" can also be read as Bessent's desperate gesture to keep these operations in check so they do not "slip up" somewhere.

If you were to name just two high-ranking officials who dictate the flow of the dollar in the U.S., they would be the Treasury Secretary and the Fed Chair. Whispers have slowly begun to surface that the current views of these two individuals—U.S. Treasury Secretary Scott Bessent and Fed Chair Kevin Warsh—on economic trends might inadvertently clash. It is being discussed that a conflict under the so-called "Bessentnomics versus Warshnomics" framework could potentially arise. Are the U.S. Treasury and the Fed currently coordinating hands intricately within a big picture, practically like a "rigged game," to solve the problems facing the U.S.? Or could they actually strike a "discordant chord"? To ensure that Bessent's boastful declaration that "I am the owner of this casino" remains valid at least until the end of this year, the answer to this very question must be clarified. And the decisive hint to the answer is unexpectedly and clearly revealed on President Trump's social media.

Anyway, depending on how the answer to this question turns out, the direction of our currency, the won, and the yen until the end of the year will also become a bit more concrete. The won was the currency that rose in value at the fastest pace among major global currencies in July and August. Can it maintain this speed in September? Can it enter the 1,200-won range per dollar? If it enters, can it stay at that price level? Or is the inflection point of the won-dollar exchange rate not far away now?

What will happen to the yen, which "collapsed no matter what was done" this year? The U.S. Fed FOMC and the Bank of Japan's monetary policy meeting in the third week of September are the first watershed moments. The prevailing outlook, inferred from the hints available so far, is that the direction of the yen is "this way."

Just how far can the "money picture" drawn by the U.S. hit the mark? Where is the next stop for the won? In [Smart E], Reporter Kwon Aelee sharpens the focus in a smart way.

1. Lower the yen! Raise the yen! What is the U.S. objective?

2. Restless interest rates... Will Bessent's operations succeed?

3. "Lower U.S. interest rates to the world's lowest level!"

4. "The won is now receiving almost its 'fair value'"

(Reported by Kwon Aelee | Video by Park Woo-jin | Planning: Jung Seo-woo | Editing: Lee Ki-eun | Design: Chae Ji-woo | The Intern: Kim Hye-won | Produced by Knowledge Contents IP Team)

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