US Treasury Secretary Scott Bessent has urged Bank of Japan governor Kazuo Ueda to take “decisive” monetary steps to tackle the yen’s weakness and prevent excessive currency volatility.
The message was delivered during a meeting on Sunday on the sidelines of the G20 gathering of finance ministers and central bank governors in Asheville, North Carolina, according to the US Treasury Department.
Mr Bessent stressed the importance of formulating and communicating monetary policy clearly enough to anchor inflation expectations, while voicing strong support for Japanese action to address what Washington considers a substantial undervaluation of the yen.
The Treasury said the weak currency was contributing to domestic inflationary pressure by raising the cost of imported goods, adding to the challenges facing Japanese households and policymakers.
The intervention comes ahead of the Bank of Japan’s next policy meeting on September 17 and 18, when markets are already expecting a further increase in interest rates. The central bank raised its policy rate to 1% in June, its highest level in 31 years.
Japan and the United States also carried out a rare joint yen-buying intervention on July 31, aimed at preventing turmoil in the currency and Japanese government bond markets from spreading more widely. The move has not provided a lasting floor for the yen.
Mr Bessent told Reuters that recent movements in the currency had not been disorderly, but said he expected Mr Ueda to “do the right thing” on monetary policy to counter further declines.
The Treasury secretary also met Japan’s finance minister, Satsuki Katayama, during the G20 discussions. The two agreed to continue co-ordinating efforts to ensure that movements in the yen remained orderly, with Japan’s finance ministry responsible for currency policy and the Bank of Japan acting as its agent.
