JAPAN’S Finance Minister Satsuki Katayama said she and US Treasury Secretary Scott Bessent shared concerns over what she called the yen’s recent “one-sided depreciation”, as Tokyo stepped up threats of intervention to stem the currency’s fall.
Katayama’s comments reflect Japan’s rising unease over a slide in the yen, which crossed the key 158-yen-per-dollar mark for the first time in about a year following reports that Japanese Prime Minister Sanae Takaichi may call a February snap election.
The reports pushed down the yen as they stoked speculation that an election win would help Takaichi secure a mandate for her expansionary fiscal policy. But the weak yen has been a headache for policymakers as it inflates import costs, weighs on households and possibly affects Takaichi’s popularity ratings.
“I conveyed my deep concern over the one-sided depreciation of the yen, seen also on Jan 9, and Secretary Bessent shared this view,” Katayama told reporters in Washington, hinting at tacit US approval for market intervention.
Katayama was speaking after a bilateral meeting with Bessent on the sidelines of a multilateral meeting on critical mineral supply chains.
A US Treasury spokesperson did not immediately respond to a request for comment on the Bessent-Katayama bilateral meeting.
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In a separate news conference, Deputy Chief Cabinet Secretary Masanao Ozaki warned of potential action. “The government will take appropriate steps on excessive currency moves, including speculative ones,” he said.
Ozaki declined to comment on the reports about an election, saying it is the Prime Minister’s prerogative to dissolve parliament.
“Japan’s argument is that yen-buying interventions should be justified as the yen’s recent weakness, despite the narrowing interest rate gap between the US and Japan, deviates from fundamentals,” said Hiroyuki Machida, director of Japan FX and commodities sales at ANZ.
But the latest yen selling would continue until the outcome of the reported election and the direction of fiscal policy become clear, meaning the need for massive firepower to keep supporting the yen, Machida said.
“So intervention is possible anytime now, but my guess is that wouldn’t happen till the yen hits 160 per dollar.”
September’s Japan-US statement
Katayama has said Tokyo has “a free hand” in dealing with excessive moves in the yen, citing a joint Japan-US statement issued in September.
The joint statement said Japan and the US reaffirmed their commitment to “market-determined” currency rates, while agreeing that foreign exchange interventions should be reserved for combating excess volatility.
Japanese policymakers have cited the statement as giving them the right to intervene when yen moves deviate from economic fundamentals and make excessively big swings.
On the multilateral rare earths meeting, Katayama said she told the participants about Tokyo’s stance on Beijing’s ban on exports of items destined for Japan’s military that have civilian and military uses, potentially including some critical minerals.
“I told the meeting that it’s highly problematic because it covers an extremely broad range of items with vague wording and includes re-export restrictions that affect third countries, including the members present in the meeting,” she said. REUTERS
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