Finance Minister Satsuki Katayama indicated her resolve to intervene in a foreign exchange market to prop up the yen as needed as her Group of Seven counterparts understand the nation¡¯s stance.
¡°We have understanding¡± from the G7 counterparts, Katayama told reporters in Paris on Tuesday after meeting with them. ¡°We will take bold action as needed.¡±
This was the first G7 meeting after Japan is suspected of conducting a series of interventions to support the yen from the end of last month. The G7 communique stated their long-held commitment that includes not to target exchange rates and that excess currency volatility can have adverse economic impacts in support for Japan.
The yen gained against the dollar ¡ª trading at around 158.82 following Katayama¡¯s remarks ¡ª after it hit the weakest level since April 30 when the government conducted the first currency intervention since 2024.
Speaking at the same news conference, Bank of Japan Gov. Kazuo Ueda reiterated his stance of continuing to conduct monetary policy to secure stable inflation, and he will be watching for upside risks to inflation.
¡°The pace of businesses passing on their costs is somewhat fast,¡± Ueda told reporters.
Ueda¡¯s comments came amid growing market expectations for a rate hike next month as the prolonged Middle East conflict fuels inflation risks. Data earlier Tuesday showed that Japan¡¯s economy grew more than expected in the first quarter, an outcome that Ueda said was roughly in line with the BOJ¡¯s view.
U.S. Treasury Secretary Scott Bessent said Tuesday in a social media post that he met with Ueda and he is confident that the governor will ¡°successfully¡± guide Japan¡¯s monetary policy.
With no clear prospect for the end of the Middle East stalemate, Prime Minister Sanae Takaichi took a U-turn Monday toward compiling an extra budget, a move that helped send super-long bond yields to a fresh record high.
Investors will be watching if Takaichi would let the BOJ lift rates as she is known as a supporter for monetary stimulus. Bessent last year said that the Takaichi government should give the BOJ space to conduct monetary policy.
Traders assign about a 75% probability of a rate hike when the BOJ delivers its next policy decision on June 16, according to the overnight swap index.
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