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Japanese Finance Minister Katsunobu Kato said Wednesday that he has agreed with new U.S. Treasury Secretary Scott Bessent that they will closely consult with each other on foreign exchange moves, but he declined to elaborate.
The agreement comes as investors gauge how President Donald Trump’s pledges will affect currency markets, including whether his possible tariff hikes would push up the U.S. dollar amid mounting inflationary pressure in the United States, further weighing on the Japanese yen.
Kato told reporters at his ministry after his online talks that he thanked Bessent for choosing him for his first virtual meeting with a counterpart since taking office earlier this week under Trump, who returned to the White House on Jan. 20.
“As for foreign exchange, we confirmed we will closely consult as ministers overseeing overall economic and financial matters,” Kato said, adding they reaffirmed Japan and the United States will cooperate in tackling global and bilateral challenges.
The yen remains on a downward trend against the dollar on speculation that the interest rate gap between the two countries is unlikely to narrow significantly despite the Bank of Japan’s additional monetary tightening, decided late last week.
The U.S. Federal Reserve is expected to halt rate cuts if tariff increases drive up import costs and accelerate inflation at home. Some analysts said the Fed might begin raising interest rates again.
Kato, who became finance minister in October, said he also agreed with Bessent, a billionaire who has served as a hedge fund manager, to work together on a broad range of topics, from geopolitics to the financial sector in the international arena.
When asked whether they had discussed U.S. tariff hike policies set to be implemented by the Trump administration during his nonconsecutive second term through 2029, Kato said he would not give specific details of his talks with Bessent.
The U.S. Senate on Monday confirmed Bessent, an economic adviser to Trump in last year’s presidential campaign, as the new treasury secretary. He will be responsible for shaping economic and financial policies, including tax cuts and higher tariffs.
Bessent will also be tasked with addressing the growing budget deficit and rising debt of the world’s largest economy.
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