Finance Minister Satsuki Katayama met with US Treasury Secretary Scott Bessent in Tokyo on Tuesday, ahead of Prime Minister Sanae Takaichi’s meeting with him. The two confirmed Japan-US coordination over developments in foreign exchange markets, where speculative moves have continued.
Washington, concerned about excessive yen weakness and dollar strength, appears to have accepted the foreign-exchange interventions by the Japanese government and the Bank of Japan to stem the yen’s decline.
Yet with some analysts saying the impact of intervention is limited, attention is now turning to whether Japan will take steps such as interest rate hikes to stabilize the currency.
The meeting between Katayama and Bessent was their first since they met in Washington in April. Speaking at a news conference afterward, Katayama said the two had “confirmed that we will continue to coordinate closely” on foreign exchange rates, adding that the US side showed “full understanding.”
Bessent wrote on X that “The level of communication and coordination between our teams in addressing undesirable, excess volatility in currency markets continues to be constant and robust.”
As the yen weakened, the Japanese government and the Bank of Japan intervened on April 30, believed to have been worth around ¥5 trillion (about $31.7 billion). There is also speculation that Japan intervened again in early May. The US side is believed to have tolerated the moves.
Intervention Buys Time, Not Stability
A rapid depreciation of the yen raises import prices in Japan, placing a burden on households and businesses. The Trump administration has also raised concerns that excessive yen weakness and dollar strength could widen the US trade deficit.
Last September, the finance ministers of the two countries issued a joint statement accepting foreign exchange intervention as a response to excessive market volatility. When the yen plunged in January this year, US authorities conducted what is known as a “rate check,” a step widely seen as a precursor to intervention, helping to put the brake on the yen’s fall.
Still, the view that intervention has only a limited effect remains deeply entrenched. Japan relies on imports from the Middle East and elsewhere for crude oil, and higher import costs worsen the country’s trade balance, creating a structural factor that encourages yen selling. More recently, higher crude prices triggered by the Iran conflict have added downward pressure on the yen.
Japan’s lower interest rates compared to the US are another reason the yen is being sold. The Bank of Japan is weighing possible rate hikes at its policy meetings from June onward, but the Takaichi administration remains wary of any move that could dampen the economy.
Asked whether monetary policy came up in the meeting, Katayama declined to comment directly, saying only that it was “a matter for the Bank of Japan.”
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Author: The Sankei Shimbun
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AloJapan.com