Japan and US Vow Continued Cooperation on Foreign-Exchange Market Stability Amid Yen Weakness

Japan's Finance Minister Satsuki Katayama has expressed concern over the yen's weakness, calling it an undervaluation problem. In a recent call with US Treasury Secretary Scott Bessent, she reaffirmed their shared concerns and agreed to strengthen cooperation on foreign-exchange market stability.

Katayama stated that despite the Bank of Japan's interest rate increase in September, concern over yen weakness has persisted due to speculation about widening US-Japan interest-rate gaps. To address this, Japan intervened several times this spring and summer to buy yen, including a joint intervention with the US in July for the first time in 28 years.

Katayama also attributed the rising Japanese government bond yields to global sovereign yield increases driven by inflation pressure, expanded fiscal spending, and increased corporate bond issuance. She pointed out that large technology companies investing in AI infrastructure are contributing to upward pressure on sovereign yields.