Yen nears record low, Japan ready to take 'decisive' steps

The Japanese government is ready to take “decisive” steps regarding currency exchange rate movements if necessary, in accordance with an agreement with the United States, Finance Minister Satsuki Katayama said on Tuesday. The statement was made after Katayama held online talks with US Treasury Secretary Scott Bessent the previous day. Katayama said the joint statement between Japan and the United States on exchange rate policy remains a guideline for both countries. According to her, both parties agreed that intervention in the foreign exchange market would only be conducted to address volatility and disorderly depreciation or appreciation of currencies. The statement emerged as the yen’s exchange rate approached a historic low against the US dollar. At one point, the yen traded in the upper range of 161 yen per US dollar, triggering speculation that Japanese authorities might intervene again to stem the weakening of their currency. “We held constructive talks amid various developments in the global economic environment, and I felt our views were very much aligned,” Katayama told reporters at the Ministry of Finance. If the yen breaches the level of 161.96 per US dollar, last recorded in July 2024, the Japanese currency will reach its weakest position since 1986. The yen remains under selling pressure as markets anticipate the interest rate differential between Japan and the United States will not narrow in the near term. This pressure is also influenced by expectations that the US central bank, the Federal Reserve, could potentially raise interest rates again this year. Katayama explained that the discussion with Bessent was not an emergency meeting, but rather a follow-up to the recent G7 summit held in France. Beyond the exchange rate issue, both ministers agreed to strengthen cooperation regarding the use of artificial intelligence models with advanced cybersecurity capabilities, including Claude Mythos developed by the US start-up Anthropic. According to Katayama, Japan and the US will coordinate in responding to concerns that such highly sophisticated AI technology could be misused to launch cyberattacks. These concerns have prompted the technology’s developers to limit access to its use.