Author: Leika Kihara

WASHINGTON (Reuters) – Japanese Finance Minister Katsunobu Kato and U.S. Treasury Secretary Janet Yellen discussed recent changes in currency exchange rates, among other things, during a bilateral meeting on Thursday, a senior Japanese finance ministry official said.

“The two sides discussed exchange rate changes and reaffirmed the need for close communication between the United States and Japan,” Atsushi Mimura, Japan’s vice finance minister for international affairs, told reporters.

The tender yen has become a source of concern for Japanese policymakers because it hurts households and retailers by increasing the cost of importing raw materials.

“Recently, we have seen unilateral, sharp changes in currency rates,” said Mimura, who oversees Japan’s currency policy.

“It is desirable that exchange rates move in a way that reflects fundamentals. We will be increasingly vigilant in the event of currency movements, including those resulting from speculation,” he said in Washington on the sidelines of the G20 and IMF meetings.

The dollar rose above 153 yen for the first time in nearly three months on Wednesday as fading expectations for massive interest rate cuts from the Federal Reserve renewed attention on the wide interest rate divergence between the U.S. and Japan.

On Thursday, the dollar reached 151.83 yen.