Katayama Warns Undervalued Yen Risks Further Pressure

Japan's Finance Minister Satsuki Katayama emphasized the importance of cooperation between Japan and the US on currency markets. Speaking after her phone call with US Treasury Secretary Scott Bessent, she stated that an undervalued yen is problematic. This comes as no surprise, given the joint intervention by both countries in early August to stabilize the currency.

Katayama also denied that Japan's current administration is reflationary, rejecting the idea that policy aims to lift growth and prices through stimulus. She stated that interest rates are determined by markets, not by government actions. This denial may offer some support to the yen, which has been trading around 157 in recent sessions.

The Finance Minister also highlighted the importance of close communication between Japan's ministry and bond market participants. She emphasized that the ministry will conduct appropriate debt management policy while maintaining a high sense of urgency. The tone of her remarks suggests that officials are watching the currency closely and coordinating with Washington, but without mentioning any specific level or action.