Japan Eyes Stable Currency Talks With US Ahead of G7 Meeting

Japanese Finance Minister Katsunobu Kato stated on Tuesday that any upcoming discussions with U.S. Treasury Secretary Scott Bessent on exchange rates would be grounded in a mutual understanding that excessive currency volatility harms economic stability. Speaking at a press conference, Kato emphasized that prior talks had reaffirmed both nations’ stance that markets should determine exchange rates, and that abrupt fluctuations can pose financial risks.

Kato and Bessent are expected to meet on the sidelines of the upcoming G7 finance ministers’ summit in Canada. The meeting comes amid ongoing concerns about Japan’s currency policies, especially given President Donald Trump’s continued focus on reducing the U.S. trade deficit. Trump has previously accused Japan of deliberately keeping the yen weak to benefit its exporters, prompting speculation that Washington may push Tokyo to allow the yen to strengthen.

While Japan and the U.S. continue separate bilateral negotiations on tariffs, the sensitive currency issue has been delegated to their finance chiefs. Kato expressed interest in exchanging views on broader economic topics during his expected dialogue with Bessent.

The minister also commented on Moody’s recent downgrade of the U.S. credit rating, saying Japan is closely monitoring its potential impact on global markets and domestic economic conditions.

Following a meeting last month in Washington, Kato and Bessent agreed to maintain “constructive” dialogue on currency policy. However, they did not set any concrete targets or mechanisms to influence yen movements, signaling that formal currency coordination remains off the table for now.

As global markets watch for clues on future yen-dollar dynamics, the outcome of this G7 meeting could shape investor sentiment and policy direction between two of the world’s largest economies.