On September 22, during a U.S.-Japan summit, President Donald Trump expressed concerns to Japan's Prime Minister Sanae Takaiichi regarding the depreciation of the yen. Takaiichi acknowledged that a significantly low yen value is an issue. Japan's Finance Minister Satsuki Katayama revealed these details during a press conference following a Cabinet meeting on September 25.
Katayama explained that this was the first time he was disclosing this information after consulting with the Prime Minister's office. He noted that the discussion of exchange rate issues was not unexpected. He added, "I will closely communicate with U.S. Treasury Secretary Janet Yellen on various matters."
On September 24, the yen-dollar exchange rate briefly rose to 159 yen per dollar in the New York foreign exchange market, marking its highest level in about three weeks. This surpassed the level (around 158 yen) before the Bank of Japan conducted a rate check with market participants on September 18. On September 25, the exchange rate fluctuated around 158 yen in the Tokyo foreign exchange market. The Nikkei reported that the rise in oil prices and strong U.S. economic performance fueled speculation of an additional interest rate hike in the U.S. in October, leading to a preference for selling yen and buying dollars. However, following Katayama's remarks, yen buying increased, reducing the exchange rate's rise to around 158.34 yen.
The highest yen-dollar exchange rate this year was recorded at 163.96 yen on July 23. To address the sharp yen depreciation and dollar strength, the U.S. and Japan coordinated a yen-buying intervention for the first time in 28 years on July 28. The Bank of Japan raised its benchmark interest rate by 0.25 percentage points to 1.25% during its monetary policy meeting on September 17-18. Two members appointed by the Takaiichi administration opposed the increase. According to the Nikkei, Takumi Naya, head of foreign exchange trading at Mitsubishi UFJ Morgan Stanley Securities, stated, "Market participants perceive that Prime Minister Takaiichi remains cautious about further interest rate hikes."
While Katayama refrained from commenting on specific policies of the Bank of Japan, he expressed hope that appropriate monetary policies would be implemented in close coordination with the government to achieve the 2% inflation target. He could not confirm whether a rate check would be conducted.
On the same day, Japan's bond market saw the yield on 10-year government bonds rise to 3.115%, reaching its highest level in nearly 30 years. The Nikkei reported that concerns over rising inflation pressures are contributing to a global increase in interest rates. Katayama remarked, "Interest rates are influenced by various factors. We are doing what we can effectively."
* This article has been translated by AI.
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