Japan's Mimura urges markets to heed clear warning on yen

(Repeats for Asia readership. ) Markets should take Japan, US message on yen "at face value" Mimura declines to comment on whether Japan will intervene again Japan-US rate gap narrowing as a trend, Mimura says "Currency alliance" encompasses very good bilateral ties By Makiko Yamazaki, Takaya Yamaguchi and Leika Kihara TOKYO, Sept 28 (Reuters) — Japan's top currency diplomat Atsushi Mimura said on Monday markets should take at face value the "very clear" message Tokyo and Washington delivered last week on the yen, signalling his resolve to act against excessive falls in the currency.

US President Donald Trump raised concerns about yen weakness at a summit with Japanese Prime Minister Sanae Takaichi, Japan's Finance Minister Satsuki Katayama said on Friday, offering an unusually detailed account of the leaders' talks on currencies. "Japan's prime minister, finance minister and the US have sent a very clear message. Markets should take that message at face value," Mimura said in an interview with Reuters on the yen's recent declines.

" While he declined to comment on whether Japan could intervene again to prop up the yen, Mimura said he remained neither satisfied nor reassured over the yen's recent moves, suggesting that Tokyo remained on guard against the risk of renewed declines in the currency. In a sign of Tokyo and Washington's shared determination to address the weak yen, Katayama and her US counterpart Scott Bessent reaffirmed that the yen's undervaluation is a matter of concern in phone talks on Friday. 75.

'Very Good' Bilateral Relationship A weak yen has become a source of concern for Japanese policymakers by pushing up the cost of imports, including for fuel, which has spiked due to the Middle East war. 25% earlier this month following a hike in June. But the move, as well as the BOJ's pledge to keep raising rates, has failed to prop up the yen, as the US Federal Reserve's rate hike and hawkish communication led to market views that the huge US-Japan rate gap will not narrow quickly. When looking at both countries' monetary policy stances since last year, the BOJ is clearly on a rate-hike path, while the Fed only began raising rates in September, Mimura said.

"As such, the gap between Japanese and US policy rates has been narrowing as a trend," Mimura said. "We are always mindful of such developments in watching market moves," he added. " Mimura said he used the language "currency alliance" to describe how the two countries' strong relationship extended beyond exchange rates to encompass cooperation on economic security, critical minerals and global supply chains. "Even in areas aside from exchange rates, there's a very good relationship between Japan and the US," Mimura said, adding that such strong ties likely led to the joint yen intervention.

Some analysts have interpreted Treasury Secretary Bessent's calls last month for Japan to "sit back and enjoy the success of Abenomics" as a swipe against Japanese Prime Minister Sanae Takaichi's big spending plans. Mimura pushed back against the view that the administration's fiscal policy was seen as reflationary, thereby prompting investors to sell yen and Japanese government bonds. "I've never received any criticism from G7, G20 or other overseas counterparts that Japan's fiscal policy is too expansionary," he said. net/)