Write an article about The yen has already strengthened about 9% this year. (Reuters pic)
BANFF: US treasury secretary Scott Bessent and Japanese finance minister Katsunobu Kato agreed yesterday that the dollar-yen exchange rate currently reflects fundamentals, the US treasury department said, a rare and explicit statement on the market situation.
President Donald Trump’s focus on addressing the huge US trade deficit and his past remarks accusing Japan of intentionally maintaining a weak yen have led to market expectations that Tokyo will face pressure to strengthen its currency’s value against the dollar to give US manufacturers a competitive advantage.
“They reaffirmed their shared belief that exchange rates should be market-determined and that, at present, the dollar-yen exchange rate reflects fundamentals,” the treasury department said in a statement.
Bessent and Kato met on the sidelines of the Group of Seven finance ministers gathering in Banff, Canada.
Asked about the Treasury’s claim that the two agreed exchange rates reflect fundamentals at a subsequent news conference, Kato said that he was not in a position to comment but added that he did not discuss ‘exchange-rate levels’.
“We agreed that currency rates should be set by markets,” he said.
The treasury department also said in the statement that, as in their previous meeting in April, they did not discuss foreign exchange levels.
The dollar briefly jumped to ¥144.40 after the US statement, but the lack of clear confirmation from the Japanese side pushed back the greenback below ¥143.50.
Japan and the US have agreed to keep the thorny issue of currency rates separate from direct trade negotiations, setting it aside for talks between their finance ministers.
A weak yen has also been a headache for Japanese policymakers because it accelerates inflation by pushing up import costs and weighs on consumption.
However, the yen has already strengthened about 9% this year, as strong uncertainties stemming from sweeping US tariffs have led investors to buy safe-haven currencies such as the yen.
In the news conference, Kato said he did not directly discuss Japan’s massive holdings of US Treasuries with Bessent.
Earlier in May, Kato surprised markets by saying that Japan could use its US$1 trillion-plus Treasuries holdings as a card in trade talks with Washington, but later clarified that his comments did not mean to suggest potential sale.
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The yen has already strengthened about 9% this year. (Reuters pic)
BANFF: US treasury secretary Scott Bessent and Japanese finance minister Katsunobu Kato agreed yesterday that the dollar-yen exchange rate currently reflects fundamentals, the US treasury department said, a rare and explicit statement on the market situation.
President Donald Trump’s focus on addressing the huge US trade deficit and his past remarks accusing Japan of intentionally maintaining a weak yen have led to market expectations that Tokyo will face pressure to strengthen its currency’s value against the dollar to give US manufacturers a competitive advantage.
“They reaffirmed their shared belief that exchange rates should be market-determined and that, at present, the dollar-yen exchange rate reflects fundamentals,” the treasury department said in a statement.
Bessent and Kato met on the sidelines of the Group of Seven finance ministers gathering in Banff, Canada.
Asked about the Treasury’s claim that the two agreed exchange rates reflect fundamentals at a subsequent news conference, Kato said that he was not in a position to comment but added that he did not discuss ‘exchange-rate levels’.
“We agreed that currency rates should be set by markets,” he said.
The treasury department also said in the statement that, as in their previous meeting in April, they did not discuss foreign exchange levels.
The dollar briefly jumped to ¥144.40 after the US statement, but the lack of clear confirmation from the Japanese side pushed back the greenback below ¥143.50.
Japan and the US have agreed to keep the thorny issue of currency rates separate from direct trade negotiations, setting it aside for talks between their finance ministers.
A weak yen has also been a headache for Japanese policymakers because it accelerates inflation by pushing up import costs and weighs on consumption.
However, the yen has already strengthened about 9% this year, as strong uncertainties stemming from sweeping US tariffs have led investors to buy safe-haven currencies such as the yen.
In the news conference, Kato said he did not directly discuss Japan’s massive holdings of US Treasuries with Bessent.
Earlier in May, Kato surprised markets by saying that Japan could use its US$1 trillion-plus Treasuries holdings as a card in trade talks with Washington, but later clarified that his comments did not mean to suggest potential sale.
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