US Secretary Scott Bessent and the Minister of Finance of Japan Shunichi Kato discussed crucial issues regarding US-Japan economic relations, including global security and ongoing bilateral discussions between the USA and Japan.
Key quotes
Told G7 meeting that American tariffs cause uncertainty
Excessive ability from G7 has been discussed.
G7 said the unbalanced macroeconomic imbalance of some countries behind the imbalance of trade.
G7 said, each country must take steps to augment domestic demand, reduce the fiscal deficit.
The conversation with Bessent lasted 30 minutes.
Today he met with the Secretary of the US Treasury Bessent.
He told Bessent that American tariffs are regrettable.
He agreed with Bessent that FX should be set by markets.
He confirmed that excessive variability of currency movements has a negative impact on economic and financial stability.
No conversations about FX levels.
Market reaction
At the time of writing, the USD/JPY pair trads 0.08% lower on the day to trade at level 144.75.
Frequently inflicted by Japanese Jena
Japan Japan (JPY) is one of the most rotating currencies in the world. Its value depends widely by the results of the Japanese economy, but more specifically by Bank of Japan Policy, the difference between the profitability of Japanese and American bonds or risk moods among investors.
One of the mandates of the Bank of Japan is currency control, so its movements are crucial for Jen. Boj sometimes intervened directly on currency markets, generally to reduce the value of Jen, although it often refrains from doing it because of the political fears of the main trading partners. BOJ Ultra-Loose Monetary policy in the years 2013–2024 meant that Jen was absorbed in relation to the main currency peers due to the growing discrepancy of policy between the Bank of Japan and other main central banks. Recently, the gradual unwinding of this ultra-losing policy gave some support to Jen.
Over the past decade, the attitude of the BOJ regarding the sticking to the ultra-losing monetary policy has led to the discrepancy of politics with other central banks, especially among the US Federal Reserve. This confirmed the expansion of the difference between 10-year bonds in the USA and Japanese, which favored the American dollar in relation to Japanese yen. The decision Bij in 2024, about the gradual abandonment of ultra-losing policy, combined with interest cuts at other main central banks, narrows this difference.
Japanese yen is often seen as a protected investment. This means that in times of market stress, investors more often place their money in Japanese currency due to its alleged reliability and stability. Turbulent times will probably strengthen the value of Jen in relation to other currencies perceived as more risky to invest.
