Trump Warns Japan on Weak Yen: Tokyo Seeks to Counter Inflation Fears
Japan's Finance Minister Satsuki Katayama revealed that US President Donald Trump expressed concern about the yen's weakness during their summit meeting. This was disclosed by Katayama at a regular news conference, where she offered an unusually detailed account of the leaders' talks on currencies. According to Katayama, Prime Minister Takaichi told Trump that an undervalued yen is problematic.
The discussion between the leaders reaffirmed the shared US-Japan stance behind their July 31 coordinated intervention in the currency market. This included a commitment to counter excessive volatility and disorderly moves in the yen. Treasury Secretary Scott Bessent and Katayama will continue to communicate closely on foreign exchange matters, including countering excessive volatility.
The dollar has been rallying against the yen due to strong US economic data, a hawkish Federal Reserve, and surging US bond yields. The yen strengthened slightly after Katayama's remarks, rising from 158.60 per dollar to around 158. However, concerns remain about an inflation overshoot driven by the weak yen and elevated energy import costs.
Treasury Secretary Scott Bessent recently suggested that Japan's priority should be fighting inflation rather than stimulating growth. This has been met with concern among some policymakers in Tokyo, who are worried about lingering elements of Abenomics-style reflation policies.