Japanese Finance Minister: Bessent has a "full understanding" of the yen intervention policy.

Japan and the US Reach Coordination on Exchange Rate Policy Stance Japanese Finance Minister Katsuyama Satsuki stated on Tuesday that US Treasury Secretary Besent has “fully understood” the authorities’ yen intervention policy, and that the coordination between the two sides regarding recent market dynamics, including exchange rates, is “extremely smooth.” Besent later posted on X, saying that communication and coordination between the two countries in dealing with “undesirable excessive exchange rate fluctuations” are “ongoing and robust.” After the meeting, the yen surged nearly 100 points to 156.75, but the dollar quickly regained its losses, with the latest quote showing 1 USD = 157.72 yen. Nomura Securities FX strategist Yujiro Goto pointed out that Katsuyama Satsuki’s statement did not send a clear signal supporting further intervention and failed to strengthen the yen. --- US-Japan Coordination on FX Stance, but Wording Leaves Ambiguity The meeting between Katsuyama Satsuki and Besent lasted about 25 minutes. At a press conference afterwards, Katsuyama Satsuki stated that the two sides discussed “market dynamics, including exchange rate trends,” and reached coordination on recent market movements. However, there had been expectations that Besent’s visit would provide explicit US endorsement for Japan’s intervention actions, but both sides’ statements were cautious in their wording. Besent’s post on X emphasized “communication and coordination,” without directly endorsing Japan’s market intervention. According to FX analysts’ estimates, Japan has spent about $63.7 billion intervening in the FX market over the past two weeks to support the yen, but the yen is still hovering near levels where authorities might intervene again. Goto said, “If the yen further weakens towards the 158 or 159 range, there is still a possibility of another intervention.” --- Besent Favors Rate Hikes in Japan Rather Than Direct Intervention Besent has previously expressed concerns about the yen against the dollar, with the Trump administration viewing a weak yen as unfairly benefitting Japanese exporters. However, according to the Financial Times, Besent prefers supporting the yen via tightening monetary policy by the Bank of Japan rather than relying on direct intervention. This stance aligns with the consensus reached previously by both countries. In the joint statement last September, the two sides clarified that FX intervention should only be used to curb excessive market volatility. Most economists believe that rate hikes provide deeper and more lasting support for exchange rates. Currently, economists are clearly divided on whether the Bank of Japan will hike rates at the June meeting. The central bank kept rates at around 0.75% at the April meeting, even though three committee members held hawkish views. The summary of opinions from the April policy meeting released Tuesday shows there are clear differences within the committee on whether to raise rates soon. On Tuesday, Japan’s 10-year government bond yield rose to 2.545%, a 30-year high, reflecting increased market expectations for a rate hike in June. --- Japan’s Economic Pressure Increases Necessity of Intervention The weak yen directly pushes up prices in Japan, which relies heavily on imported energy, food, and other raw materials, suppressing household consumption. Official data released Tuesday showed household spending in Japan fell 2.9% year-on-year in March, much worse than economists’ expectations, with consumer confidence plummeting due to ongoing tensions in the Middle East. Bank of Japan Governor Kazuo Ueda is weighing two risks: first, falling behind in tackling inflation, and second, if the Iran conflict continues, the Japanese economy could be pushed into recession. --- Risk Warning and Disclaimer The market contains risks, and investment requires caution. This article does not constitute personal investment advice, nor does it take into account the unique investment objectives, financial situations, or needs of individual users. Users should consider whether any opinions, views, or conclusions contained in this article are suitable for their specific circumstances. Investing based on this information is at your own risk.