Trump Warns Japan on Yen Weakness, Markets React
U.S. President Donald Trump directly expressed concerns about yen weakness during his meeting with Japanese Prime Minister Sanae Takaichi in New York this week, prompting markets to refocus on the scope for U.S.-Japan coordination on exchange rate policy.
Takaichi called the yen's undervaluation 'a problem' after Trump raised concerns, according to Finance Minister Satsuki Katayama. The remarks follow a joint currency intervention in late July this year, when the U.S. and Japan bought yen and sold dollars to stem the yen's rapid decline.
The yen strengthened against the dollar in Tokyo trading Friday morning from around 158.70 to approximately 158.38, with market participants interpreting successive remarks as an indication that Tokyo authorities are attempting to stabilize exchange rate expectations through multiple channels.
Japanese officials have been sending signals about adjusting the policy environment, including Minister for Economic Strategy Minoru Kiuchi's statement that Japan no longer needs reflationary policies similar to those pursued under 'Abenomics.'