Finance Minister Katsunobu Kato said he¡¯s arranging a bilateral meeting with U.S. Treasury Secretary Scott Bessent this week to discuss topics including currency matters, triggering further gains in the yen.
¡°We are currently working on setting a date for the meeting with Secretary Bessent,¡± Kato told reporters on Tuesday. The talks are expected to take place in Canada, where Kato will attend a meeting with his Group of Seven counterparts. ¡°I hope to discuss various issues with the U.S. including foreign exchange.¡±
Kato noted that the conversation will build on the two countries¡¯ existing agreement that exchange rates should be determined by the market and that excessive volatility can have adverse effects.
The yen gained to as much as ?144.73 against the dollar following Kato¡¯s remark, after trading around ?145.50 earlier in the morning.
The finance minister¡¯s comments come amid heightened market focus on potential currency-related developments between the two nations as part of ongoing trade negotiations. Despite Kato¡¯s repeated reassurances that the upcoming talks with Bessent will likely remain consistent with prior dialogues, market participants continue to speculate over the possibility of U.S. pressure for a weaker dollar.
One sign of this lingering speculation is the rally in several Asian currencies last week, following reports that the U.S. and South Korea discussed currency issues during trade talks. The yen and the won both rose more than 1% after the news.
While markets remain on edge, U.S. officials seeking to negotiate trade deals are not working to include currency policy pledges in the agreements, according to a person familiar with the matter.
Separately, Kato said he is closely monitoring the impact of the recent Moody¡¯s downgrade of U.S. credit. Last week the creditor lowered its rating from Aaa to Aa1, citing growing fiscal deficits and ballooning debt. The downgrade, which follows similar moves by Fitch Ratings and S&P Global, rattled markets on Monday, pushing the yen to ?145 per dollar and triggering a decline in equities.
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