U.S.-Japan Talks Address Yen Volatility and Monetary Policy

U.S. Treasury Secretary Scott Bessent and Japanese Finance Minister Satsuki Katayama emphasized the importance of sound monetary policy amidst volatility in yen's value. Markets anticipated intervention as yen hit an 18-month low but rebounded after verbal warnings. Bessent urged Japan to further raise interest rates to stabilize the yen.

In a bid to address concerns over fluctuating currency values, U.S. Treasury Secretary Scott Bessent met with Japanese Finance Minister Satsuki Katayama on Monday. The discussions focused on the necessity for effective monetary policy formulation and communication, as stated by the U.S. Treasury Department.

The meeting highlighted the undesirability of excessive exchange rate fluctuations, particularly as the yen plummeted to an 18-month low earlier in the week. Katayama's verbal intervention caused the yen to strengthen by 0.43% against the dollar after hitting its weakest point since July 2024.

Scott Bessent signaled the importance of addressing the yen's depreciation through faster interest rate hikes by the Bank of Japan. During the talks, Bessent encouraged Japan's Prime Minister, Sanae Takaichi, to permit the BOJ to raise rates further, advocating against excessive yen weakening while Japan works towards its 2% inflation target.

(With inputs from agencies.)