The U.S. and Japan maintain "constant and robust" coordination in tackling undesirable, excessively volatile currency moves, U.S. Treasury Secretary Scott Bessent said on Tuesday after meeting his Japanese counterpart during a visit to Tokyo.
The remarks suggest Washington broadly consents to Japan's recent round of yen-buying intervention aimed at propping up its sagging currency, which is inflicting pain on the economy by pushing up import costs.
"I was pleased to reaffirm the strong economic partnership between the United States and Japan," Bessent said on X.
The comments came just hours after Japanese Finance Minister Satsuki Katayama told reporters the two had reaffirmed close efforts in tackling exchange rate moves, including currency intervention.
"The level of communication and coordination between our teams in addressing undesirable, excess volatility in currency markets continues to be constant and robust," Bessent added.
The dollar rose to about 157.72 yen after Bessent's remarks, which fell short of market expectations for stronger warnings on sharp declines in the yen, before dropping abruptly to 156.74 yen.
It was not immediately clear if the rise was due to intervention.
"Markets wanted to know whether there was no change in Bessent's stance on Japan's monetary policy," said Yuji Saito, executive adviser to SBI FX Trade. "There was not much new for markets from Bessent's comment on X."
Japan's response to currency moves in line with U.S. pact
Katayama said she confirmed with Bessent that Japan was responding to currency moves in line with a joint statement signed with the U.S. last September that allowed for foreign exchange intervention to combat excessive market volatility.
"Given current circumstances, we strongly confirmed anew the need to continue coordinating closely on market moves," she said when asked whether Bessent had commented on recent suspected currency intervention by Japan to support the yen.
"We engaged in discussions on deepening our coordination on various fronts," Katayama added, in response to a query whether "close coordination" meant that Washington could take the initiative in tackling sharp falls in the yen.
Silence on BOJ
Japanese policymakers are wagering that an endorsement from Bessent on their foray into the currency market could give their intervention some extra bite and help slow the yen's slide.
Some analysts have also speculated that Bessent might renew his calls for speedier rate hikes by the Bank of Japan (BOJ) as a way to support the yen.
Katayama declined to comment when asked whether the meeting with Bessent touched on the BOJ's monetary policy. Bessent has not made any comment yet on the BOJ.
BOJ Governor Kazuo Ueda returns to Tokyo on Wednesday from a visit to Switzerland for a meeting of the Bank for International Settlements. It is uncertain if Ueda will return in time to meet Bessent, who is set to wrap up his three-day visit that day.
With the war-induced oil price spike intensifying price pressures, some BOJ policymakers argued in April that rates may need to rise soon, with one flagging the chance of a June move, a summary of opinions at last month's meeting showed.
Japan has also flagged the possibility of stepping into oil futures markets as it sees speculative surges in energy prices as a major driver of the yen's weakness against the dollar, but Katayama clarified on Tuesday that it had taken no such step yet.
Bessent also met Ryosei Akazawa, Japan's minister for economy, trade and industry, and agreed to strengthen ties in the fields of energy and critical minerals.