ASHEVILLE, North Carolina - Japanese Finance Minister Satsuki Katayama held talks Monday with U.S. Treasury Secretary Scott Bessent amid the yen's stubborn weakness, an official with knowledge of the matter said.
The official, who provided the information on condition of anonymity, said Bank of Japan Governor Kazuo Ueda also met with Bessent in Asheville, North Carolina, where a two-day Group of 20 finance meeting will run through Tuesday.
The talks came a month after Japan and the United States conducted a rare joint currency market intervention to prop up the yen.
Although the agenda and outcome of the talks were not yet known, given their recent statements, Katayama, Ueda and Bessent likely shared the view that excessive yen depreciation is detrimental to the economies of Japan and the United States.
Earlier in the day, Bessent, who is co-chairing the G20 meeting with U.S. Federal Reserve chief Kevin Warsh, said he expects Japan to take further steps to tackle the yen's persistent weakness.
"I can't affect the natural equilibrium. What we can do is send a signal, and as I've said, I have information that the market doesn't have," Bessent said in a CNBC interview when asked about the effectiveness of the joint market intervention.
With the yen having fallen against the U.S. dollar again despite the intervention, Bessent said, "It's my belief that the Japanese government and the BOJ will do things that will lead to a stronger yen."
He added that market players have priced in a rate hike by the Japanese central bank.
The first Japan-U.S. yen-buying intervention since the 1998 Asian financial crisis took place on July 31, after the currency weakened to a 40-year low near 164 against the dollar.
Japan's Finance Ministry on Friday revealed that Tokyo spent a record 15.4 trillion yen ($96 billion) over the past month to support the yen.
But the yen's weakness has returned, completely erasing the gains from the historic intervention by late last week, when it slid past the psychologically important 160 to the dollar threshold.
Bessent has expressed concern that extreme volatility of the yen could result in higher U.S. interest rates, making it more expensive for Americans to borrow money for homes, cars and other purchases, something President Donald Trump appears desperate to avoid as November's midterm congressional elections near.
Trump has relentlessly pressured the Fed to cut interest rates, even though inflation has exceeded its 2 percent goal for more than five years.
Contrary to Trump's stated desire, the Fed is becoming more likely to raise interest rates as the U.S.-Israeli war against Iran has pushed up energy and other consumer prices, intensifying inflation pressures.
The wide interest rate gap between Japan and the United States remains a dominant driver of the yen's weakness against the dollar, and the Japanese currency is prone to depreciate further if Treasury yields move higher.
For Japan too, a persistently weak yen has become a serious challenge. While the currency's depreciation has strengthened the country's export competitiveness, it has significantly raised import costs, damping domestic consumption.
The Japanese government's decision in early August to lower the consumption tax rate on food and beverages to 1 percent from 8 percent for two years has added to concern about Japan's public debt.
