US, Japan Reaffirm Strong Currency Coordination Amid Yen Volatility

U.S. Treasury Secretary Scott Bessent and Japanese Finance Minister Satsuki Katayama reaffirmed strong cooperation on foreign exchange policy during meetings in Tokyo, signaling continued coordination to address excessive volatility in currency markets. The discussions come as Japan intensifies efforts to stabilize the weakening yen through market intervention.

Bessent stated that the United States and Japan maintain “constant and robust” coordination in responding to sharp currency fluctuations. His remarks indicate Washington’s broad support for Japan’s recent yen-buying intervention, which aims to strengthen the Japanese currency and reduce rising import costs that have pressured households and businesses.

Katayama confirmed that Japan’s response to currency volatility aligns with a bilateral agreement reached with the United States last September. The pact allows both countries to take appropriate action against excessive market swings. She emphasized that Tokyo and Washington continue to cooperate closely on recent foreign exchange developments.

Despite the coordinated stance, the Japanese yen weakened slightly after the meeting, with USD/JPY moving above 157.50. Market analysts noted that officials avoided issuing a strong warning against further yen depreciation, disappointing traders who expected firmer verbal intervention.

Investors are closely watching whether the U.S. Treasury will continue supporting Japan’s currency stabilization measures. Analysts also speculate that Washington could encourage the Bank of Japan to accelerate interest rate hikes to help support the yen and control inflationary pressure caused by higher import and energy costs.

Japan has additionally considered intervention in oil futures markets to counter speculative energy price surges that contribute to yen weakness, although Katayama clarified that no such action has been taken so far.

During his visit, Bessent also met Japanese Economy, Trade and Industry Minister Ryosei Akazawa to strengthen cooperation in energy security and critical minerals. He is expected to conclude his Tokyo trip with a meeting with Prime Minister Sanae Takaichi on Wednesday.