Bessent backs using US financial power as foreign policy tool

WASHINGTON: US Treasury Secretary Scott Bessent advocated on Tuesday for Washington’s use of financial power as a foreign policy tool with the goal of advancing the interests of American allies, including in financial and political situations abroad.

“I believe that I can use the balance sheet of the US for foreign policy. So, we have a foreign policy goal and that is to create allies in the Western hemisphere,” Bessent said in an event at the SMU Cox School of Business.

“Argentina was the front-runner for that and it was my belief that the Milei government had sound policies,” he said, referring to Argentine President Javier Milei’s government.

Last year, the US provided Argentina with a multibillion-dollar support package to help stabilize its currency and bolster Milei ahead of midterm elections.

Bessent’s comments marked an open acknowledgment of the Trump administration’s willingness to use US financial resources to shape the politics and economies of foreign countries.

President Donald Trump’s administration has tried to sway political contests across other parts of Latin America and has moved to increase US presence and influence in the region.

Trump also ordered the seizure of ousted Venezuelan leader Nicolas Maduro in a deadly raid and the US military has carried out multiple strikes on boats in the Caribbean that have killed dozens.

Rights advocates, both in the US and around the world, say such actions are imperialist and amount to extrajudicial killings. Trump casts them as attempts to advance US interests and counter drug trafficking and illegal immigration.

Bessent also spoke about the US having joined Japan in a rare joint yen-buying intervention on July 31, which signalled determination to prevent a selloff in the yen and Japanese government bonds from spilling over into global markets.

“When we intervened with the Japanese yen, I have pretty good insight into what the Japanese, what the Bank of Japan is going to do, what Japanese policy makers are going to do,” Bessent said.

The Financial Times reported that the Treasury chief cautioned market participants that challenging his interventions could invite pain. “I have asymmetric information. I am the house now,” the newspaper said Bessent said at the event, adding “you can bet against me if you want.”

Despite Bessent’s confidence in the direction of his interventions, which have included actions to counter a rise in long-term government bond yields, the real world impact-has been mixed. The yen has rallied amid Middle East war developments and was at a seven-month high Wednesday amid pressure on the dollar.

Meanwhile, the government’s long-term borrowing costs have risen despite the Treasury’s desire for that not to happen. On Wednesday the government announced upsized buyback operations for long-dated Treasuries, while the yield on the 30-year bond moved up to its highest level since 2007.

The 10-year bond yield, which is highly influential in setting real-world borrowing costs, is also up quite a bit. The 30-year mortgage rates rose in the latest week, hitting their highest level since June 2025 at 6.85% in the week ended September 4, the Mortgage Bankers Association said on Wednesday.