US and Japan Agree Currency Swings Are Bad, Will Talk More

The US and Japan are talking about currency. Japan has recently acted to help its yen. This is a sign of cooperation between the two countries.
By Newsroom | Finance, International Relations |

TOKYO - U.S. Treasury Secretary Scott Bessent has affirmed a shared view with Japan that significant fluctuations in currency markets are "undesirable." Following meetings with Japanese officials, including Prime Minister Sanae Takaichi and Finance Minister Satsuki Katayama, Bessent indicated robust communication channels remain open between the two nations to address what he termed "excessive volatility." These discussions follow recent interventions by Japan aimed at bolstering the yen, which saw the USD/JPY pair dip to near 156.70 shortly after Bessent's remarks. The U.S. official reiterated confidence in the resilience of the Japanese economy and its fundamental strength.

US, Japan agree excess FX volatility undesirable, Bessent says - 1

Bessent stated that his department is in "very close contact" with Japan's Ministry of Finance, suggesting a level of coordinated observation, if not direct action. While acknowledging Japan's recent moves in the forex market, Bessent stopped short of committing the U.S. to joint intervention efforts. His comments on X, formerly Twitter, suggested that "some actions" were taken together against "excessive volatility." The Secretary also noted positive discussions on a US-Japan investment agreement, critical minerals, and U.S. support for Japan's investment screening mechanisms.

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US, Japan agree excess FX volatility undesirable, Bessent says - 2

"I believe the fundamentals of the Japanese economy are strong and resilient, and that that will be reflected in the exchange rate," Bessent told reporters.

The exchange between U.S. and Japanese officials occurs against a backdrop of a persistently weak yen, prompting Tokyo to take independent measures to stabilize its currency. Bessent expressed confidence in Bank of Japan Governor Ueda's handling of monetary policy but made no specific requests regarding policy direction. Discussions also touched upon former President Trump's potential visit to Beijing and the importance of the U.S.-Japan alliance in that context.

The implications of Bessent's statements appear to be a tacit acknowledgment of Japan's predicament and its recent efforts to manage currency depreciation. However, the U.S. has historically been cautious about direct intervention, and no explicit commitment for joint action has been made, leaving the nature of future coordination somewhat open to interpretation.

Frequently Asked Questions

Q: Why are the US and Japan talking about currency?
US Treasury Secretary Scott Bessent and Japanese officials met because they both think big changes in currency values are 'undesirable.' They want to manage the yen and dollar.
Q: What did the US say about Japan's actions to help the yen?
Secretary Bessent said the US and Japan are in 'very close contact' and have taken 'some actions' together against 'excessive volatility.' He believes Japan's economy is strong.
Q: Will the US and Japan work together to change currency values?
Bessent did not say the US would join Japan in direct action to change currency values. He said they are talking and observing the situation closely.
Q: What else did the US and Japan discuss?
Besides currency, they talked about a US-Japan investment deal, important minerals, and how the US helps Japan check investments. They also mentioned former President Trump's possible visit to Beijing.