US Treasury Secretary Scott Bessent said on Sunday recent Japanese Yen (JPY) moves were “pretty well contained,” suggesting the Japanese currency’s renewed weakness were not seen as the kind of disorderly moves that led to a rare joint Japan-US intervention last month, Reuters reported.
On China’s front, Bessent stated that Washington will hold ‘very robust’ talks with China, focusing on stopping powerful models getting into non-state actors’ hands.
Key quotes
Japan likely reached end of Abenomics reflation program.
Yen fluctuations are ‘pretty well contained’ when questioned about disorderly moves.
Will meet BoJ’s Ueda on sidelines of G20 finance leaders’ summit, praises Ueda as an underrated market-savvy economist.
With Japan Prime Minister’s support, BoJ Governor Ueda will act appropriately on monetary policy.
Under PM Takaichi, government intervenes less in economic policy, should ‘sit back and enjoy’ success of Abenomics and let it run.
He won’t advise on whether BoJ should consider back-to-back rate increases.
Will urge G20 nations at finance meeting to reassess trade terms with China to lower global imbalances.
Tougher trade barriers on Chinese goods would encourage Beijing to shift economy from exports to domestic demand.
To hold ‘very robust’ talks with China, focusing on stopping powerful models getting into non-state actors’ hands.
US direct trade position with China improving, will pursue tariff cuts on $30 billion in non-strategic goods each side.
World can’t accept China with ongoing $1.2 trillion trade surplus – source interview.
Unclear if he will meet Chinese vice premier He Lifeng in person before Trump-Xi summit in late September.
Market reaction
As of writing, the USD/JPY pair is up 0.02% on the day at 160.15. Meanwhile, the AUD/USD pair is losing 0.06% to trade at 0.7160.
Bank of Japan FAQs
The Bank of Japan (BoJ) is the Japanese central bank, which sets monetary policy in the country. Its mandate is to issue banknotes and carry out currency and monetary control to ensure price stability, which means an inflation target of around 2%.
The Bank of Japan embarked in an ultra-loose monetary policy in 2013 in order to stimulate the economy and fuel inflation amid a low-inflationary environment. The bank’s policy is based on Quantitative and Qualitative Easing (QQE), or printing notes to buy assets such as government or corporate bonds to provide liquidity. In 2016, the bank doubled down on its strategy and further loosened policy by first introducing negative interest rates and then directly controlling the yield of its 10-year government bonds. In March 2024, the BoJ lifted interest rates, effectively retreating from the ultra-loose monetary policy stance.
The Bank’s massive stimulus caused the Yen to depreciate against its main currency peers. This process exacerbated in 2022 and 2023 due to an increasing policy divergence between the Bank of Japan and other main central banks, which opted to increase interest rates sharply to fight decades-high levels of inflation. The BoJ’s policy led to a widening differential with other currencies, dragging down the value of the Yen. This trend partly reversed in 2024, when the BoJ decided to abandon its ultra-loose policy stance.
A weaker Yen and the spike in global energy prices led to an increase in Japanese inflation, which exceeded the BoJ’s 2% target. The prospect of rising salaries in the country – a key element fuelling inflation – also contributed to the move.
