Japan-U.S. Finance Ministers’ Meeting: Seek to Deepen Cooperation on Foreign Exchange Markets

Editorial

16:21 JST, May 13, 2026

Uncertainty about the outlook for the global economy continues to grow due to the turmoil of the situation in Iran. There are also growing concerns over China, which shows no sign of ceasing its economic coercion.

It can be said that the importance of Japan and the United States taking concerted action to deal with economic challenges has increased even further.

U.S. Treasury Secretary Scott Bessent visited Japan ahead of a U.S.-China summit and held talks with Prime Minister Sanae Takaichi, Finance Minister Satsuki Katayama and other officials.

Bessent and Katayama confirmed close cooperation on issues such as foreign exchange market trends and the strengthening of the supply chains for rare earths. They also shared the perception that China’s export restrictions are “unfair” in an effort to keep China in check. Bessent coordinated policy toward China with Takaichi, among other issues on the agenda.

Bessent plays a pivotal role in the economic policy of U.S. President Donald Trump’s administration and has been a key figure in negotiations on tariffs and other countries’ investments in the United States. He also serves as a key architect of its economic policy toward China. It is significant for Japan to have been able to confirm a cooperative relationship with Bessent.

A key focus of the finance ministers’ talks was the assessment of the yen-buying, dollar-selling intervention in the foreign exchange market that was carried out by the Japanese government and the Bank of Japan at the end of April, the first such intervention in one year and nine months.

The United States, which values free markets, has traditionally taken a negative stance toward foreign exchange intervention.

At a press conference following the meeting, Katayama stated, “We confirmed that Japan and the United States are coordinating very well regarding recent foreign exchange market trends.” This indicates her perception that Japan has obtained the understanding from the U.S. side regarding the foreign exchange intervention.

The U.S. side has a keen interest in Japan’s economic policies. If a weak yen and the resulting decline in bond prices cause long-term interest rates in Japan to rise, this could push up U.S. interest rates as well. In that case, borrowing costs for businesses and households would increase, which could have a significant negative impact on the U.S. economy.

Given that the Japanese and U.S. economies are closely connected, it is essential to maintain close communication while taking each other’s interests into account.

In the foreign exchange market, where massive amounts of funds are transferred, it is said that the effects of intervention are temporary. Many point out that it is, rather, the interest rate differential between Japan and the United States that is fueling the weak yen.

With the Strait of Hormuz blocked, crude oil prices remain high. In Japan, too, there is a high risk that prices will further rise in the future. On May 12, long-term interest rates temporarily rose to 2.545%, reaching their highest level in about 29 years.

First and foremost, the Bank of Japan should carefully determine the timing of additional interest rate hikes.

Fiscal policy is also crucial. Since the Takaichi administration took office in autumn last year, the weak yen and the rise in long-term interest rates have progressed with the market being on the alert over its expansionary fiscal policy. It will also be essential for the government to promptly clarify its path toward fiscal consolidation.

(From The Yomiuri Shimbun, May 13, 2026)