Yen Rises Against Bitcoin, Dollar as Scott Bessent Predicts Bank of Japan Rate Hike

The yen is no longer the most attractive funding currency, and the currency's strength may not necessarily lead to broad-based risk aversion, one expert said.

Aug 14, 2025, 8:06 a.m.

The yen (JPY) strengthened against the dollar (USD) and bitcoin

after U.S. Treasury Secretary Scott Bessent said the Bank of Japan is behind the curve on inflation and will probably have to raise interest rates.

“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,” Bessent said during an interview with Bloomberg TV.

Bessent's take contrasts with that of BOJ Governor Kazuo Ueda, who has justified moving slowly on rate increases because underlying inflation, which focuses on the strength of domestic demand and wages, remains short of the central bank's 2% target even though the headline rate is above 3%. In July, the bank held its benchmark interest rate steady at 0.5% while providing no clues on future moves.

The Trump administration has for months been calling for tighter monetary policy in Japan to halt the yen's depreciation and narrow the rate differential between the two currencies. In a report published in June, the Treasury called for the BOJ to focus on growth, inflation and the normalization of the yen's weakness against the dollar as part of a structural rebalancing of bilateral trade, according to the Financial Times.

Bessent's comments strengthened the yen higher across the board. BitFlyer listed BTC/JPY pair fell 1.7% to 17,845,432 yen, posting bigger losses than Coinbase's BTC/USD pair, which dropped to $121,650. The dollar-yen pair (USD/JPY) slipped for the third straight day, hitting a three-week low of 146.21, according to data source TradingView.

Risk-off ahead?

Traders have historically used the yen as a carry currency to fund purchases of assets in high-yielding economies. That is, they've exploited Japan's low interest rate to borrow yen and buy assets that give a higher return, profiting from the difference. As such, rallies in the yen often trigger fears of risk aversion in financial markets.

That may not be the case anymore, according to Marc Chandler, chief market strategist at Bannockburn Global Forex.

Risk-off is frequently the result of unwinding of funding trades, e.g. short yen, long Brazilian real (BRL). However, the yen may not be the most attractive funding currency at present.

"Not only is Swiss policy rate at zero, but JPY volatility is higher," Chandler told CoinDesk in an email.

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