IDN FINANCIAL




 

The United States and Japan agreed that excessive volatility in foreign exchange markets is undesirable, US Treasury Secretary Scott Bessent said on Tuesday.

The statement was viewed as a signal of support for Japan’s intervention efforts to prop up the weakening yen, according to Reuters.

After meeting Prime Minister Sanae Takaichi, Bessent also expressed confidence that Bank of Japan Governor Kazuo Ueda would be able to steer monetary policy appropriately to avoid falling behind in addressing elevated inflationary pressures.

“We both believe excessive volatility is undesirable, and we continue to communicate closely with Japan’s Ministry of Finance and will maintain coordination,” Bessent told reporters when asked about Japan’s currency intervention.

He added that Japan’s economic fundamentals were considered strong and resilient, and would ultimately be reflected in the exchange rate.

The remarks indicate Washington broadly does not object to Japan’s recent interventions in the foreign exchange market to curb yen weakness, which has raised import costs and weighed on the domestic economy.

Earlier, Japan’s Finance Minister Satsuki Katayama also said she and Bessent had reaffirmed the importance of close coordination in responding to currency movements, including market intervention.

In a post on platform X after meeting Katayama, Bessent said communication between the two countries in handling “excessive volatility” in foreign exchange markets remained strong and ongoing.

However, the remarks were seen as falling short of market expectations for a firmer warning against yen weakness, prompting the dollar to briefly strengthen to around 157.72 yen before the Japanese currency rebounded sharply.

Separately, some analysts had previously speculated that Bessent would pressure the Bank of Japan to accelerate interest rate hikes to support the yen.

Instead, he expressed confidence in Governor Ueda’s ability to manage monetary policy.

Bessent also met with other Japanese economic officials and discussed strengthening co-operation in energy and critical minerals during his working visit to Japan.