Japan and U.S. Coordinate to Stabilize Undervalued Yen
Finance Minister Satsuki Katayama and U.S. Treasury Secretary Scott Bessent agreed to increase cooperation to ensure orderly foreign exchange markets and address yen undervaluation.
Japanese Finance Minister Satsuki Katayama and U.S. Treasury Secretary Scott Bessent agreed to increase cooperation to ensure orderly foreign exchange markets following a phone call on September 25. During a subsequent news conference in Tokyo, Katayama characterized the yen's undervaluation as "problematic," a view shared by Bessent, who believes the currency should reflect Japan's economic fundamentals.
This coordination follows a joint U.S.-Japanese intervention in August and comes amid significant volatility. The yen has been impacted by expectations of interest-rate hikes by the Bank of Japan and investor concerns regarding the fiscal policies of Prime Minister Sanae Takaichi. These concerns have pushed 10-year Japanese government bond yields toward a 30-year high.
Katayama explicitly rejected claims that the Takaichi administration is pursuing reflationary policies, asserting that interest rates are determined by markets. While she emphasized a high sense of urgency and close communication with bond market participants regarding debt management, she did not specify a target currency level or announce immediate new actions.
