ASHEVILLE, N.C. — Japanese Finance Minister Satsuki Katayama stated Monday that she and U.S. Treasury Secretary Scott Bessent agreed that “orderly” movements of the Japanese yen are essential for maintaining stability in global financial markets.
Following their bilateral meeting on the sidelines of the G20 finance ministers and central bank governors gathering, Katayama noted that ongoing coordinated actions between Tokyo and Washington will be crucial to achieving this objective.
Bank of Japan (BOJ) Governor Kazuo Ueda also held separate talks with Bessent in Asheville, North Carolina, where the two-day G20 finance meeting was underway.
The discussions took place roughly one month after Japan and the United States executed a rare, coordinated intervention in currency markets to bolster the yen.
Earlier in the day, Bessent—who is co-chairing the G20 summit alongside Federal Reserve Chair Kevin Warsh—expressed the expectation that Tokyo will implement additional measures to address the persistent depreciation of the yen.
“I cannot dictate natural market equilibrium, but we can send a clear signal,” Bessent remarked during a CNBC interview regarding the efficacy of the joint intervention. “I possess insights that the market currently lacks.”
Despite the yen sliding once again against the dollar following the intervention, Bessent maintained his conviction, stating, “I believe the Japanese government and the Bank of Japan will take actions that will ultimately lead to a stronger yen.”
He further noted that financial markets have already factored in an interest rate hike by Japan’s central bank.
The historic joint intervention, the first of its kind since the 1998 Asian financial crisis, occurred on July 31, triggered after the yen plunged to a multi-decade low of nearly 164 per dollar.
According to figures released by Japan’s Finance Ministry on Friday, the government deployed a record 15.4 trillion yen (approximately $96 billion) over the past month in efforts to prop up the currency.
However, the yen’s weakness has resurged, completely erasing the gains achieved through the historic intervention by late last week, as the currency slipped past the critical psychological threshold of 160 to the dollar.
Bessent has voiced concern that extreme yen volatility could trigger higher U.S. interest rates, increasing borrowing costs for American consumers looking to purchase homes, vehicles, or other major items. This economic headwind is something President Donald Trump is reportedly eager to avoid ahead of November’s midterm congressional elections.
President Trump has consistently pressured the Federal Reserve to lower interest rates, despite inflation remaining above the central bank’s 2 percent target for over five years.
Contrary to Trump’s preferences, the Federal Reserve is increasingly leaning toward raising interest rates. This shift is driven by ongoing geopolitical tensions, specifically the conflict involving the U.S., Israel, and Iran, which has driven up energy and consumer prices, intensifying inflationary pressures.
The significant interest rate differential between Japan and the United States remains the primary driver of the yen’s weakness. The Japanese currency remains highly susceptible to further depreciation if U.S. Treasury yields continue to climb.
For Japan, a persistently weak yen presents a formidable challenge. While currency depreciation enhances export competitiveness, it simultaneously drives up the cost of imports, dampening domestic consumption and economic growth.
The Japanese government’s decision in early August to slash the consumption tax rate on food and beverages from 8 percent to 1 percent for a two-year period has further fueled concerns regarding the nation’s mounting public debt.
