Tuesday, during Asian trading hours, the US dollar moved in a narrow range against the Japanese yen, currently trading near 157.35, nearly flat on the day. The latest remarks by Japanese Finance Minister Satsuki Katayama on the yen and US-Japan cooperation have become the focus of market attention.

Japanese Finance Minister Satsuki Katayama said Tokyo and Washington agreed to strengthen cooperation. She made the remarks when asked about her September 25 phone call with US Treasury Secretary Bessent. She said Japan will continue to maintain close communication with the US Treasury to help ensure an orderly foreign exchange market. She also said that, generally speaking, an undervalued yen is a problem. These remarks came after the September 25 call, in which Bessent raised that a strong yen reflecting Japan's economic fundamentals is desirable, and after the US-Japan joint intervention confirmed in early August.

Katayama Says an Undervalued Yen Is a Problem, Echoing Bessent on Strengthening Cooperation

In response to questions about the September 25 phone call with US Treasury Secretary Scott Bessent, Japanese Finance Minister Satsuki Katayama clearly stated that Japan and the United States have agreed to further strengthen cooperation. She stressed that Japan will continue to maintain close communication with the US Treasury to help ensure that the foreign exchange market operates in an orderly manner. Katayama also commented on the yen itself, noting that "generally speaking, an undervalued yen is a problem." This statement closely followed the content of the September 25 call, in which Bessent proposed that a strong yen reflecting Japan's economic fundamentals is desirable. Previously, the two countries confirmed in early August that they had carried out joint intervention to support the yen. Katayama's comments closely echoed Bessent's views, indicating that the two sides' positions on the yen exchange rate issue are further aligning. The two sides not only reiterated their shared concern about the yen's undervaluation, but also made clear their willingness to continue coordinating and communicating. This sends a clear signal to the market: the authorities of both countries are closely synchronized on foreign exchange market developments and are prepared to take coordinated action when necessary to maintain exchange rate stability and market order.

Denies Government Reflationist Stance, Stresses Rates Are Determined by the Market

On the policy stance, Satsuki Katayama clearly denied that the Takaichi government belongs to the reflationist camp. She also stressed that interest rate levels are ultimately determined by the market. Reflationism usually means boosting growth and prices through active fiscal stimulus and monetary easing, and the market often associates it with a weaker currency and rising bond yields, so this denial is particularly important for yen watchers. Katayama's statement was intended to dispel market speculation that the Japanese government intends to push down the yen and drive up inflation. If the market believed the government welcomed a weak yen, downward pressure on the yen would increase significantly; the current clear denial helps ease such concerns and, to a certain extent, supports the yen. She further clarified that Prime Minister Takaichi respects the independence of the Bank of Japan, and day-to-day monetary policy should be decided independently by the central bank, thereby reducing doubts about deviations in the coordination of fiscal and monetary policy and stabilizing market expectations for Japan's policy framework.

Bond Market Communication and the Standard Wording of an "Orderly" Market

Regarding the bond market, Satsuki Katayama said the Ministry of Finance will maintain close communication with market participants and implement appropriate debt management policies. She added that the Ministry of Finance will continue to stay in close contact with market participants while maintaining a high sense of urgency. Likewise, the phrase "orderly" market is standard official wording, indicating that the authorities are focused on the speed and magnitude of exchange rate or yield movements rather than locking in a specific level. This statement continues Japanese officials' long-standing emphasis on communication with the bond market, and it appears especially critical against the backdrop of Japanese government bond yields recently rising to multi-year highs. By emphasizing communication and appropriate management, Katayama sought to send a stabilizing signal to the market, avoid unnecessary panic caused by debt issuance or yield fluctuations, and at the same time leave room for subsequent policy operations to ensure the bond market operates within a controllable range.

Market Impact: Yen Under Pressure, Traders Test Official Resolve

These remarks as a whole reinforced the message repeatedly conveyed by Japanese officials: the authorities are closely monitoring exchange rate movements and coordinating with Washington. The US dollar is currently trading near 157.35 against the Japanese yen, having briefly fallen below 157 late last week before recovering toward 158. Katayama did not name any specific level or announce any actual action, and her wording remained within the familiar framework of communication and coordination. Traders will pay close attention to whether the official tone hardens if the yen weakens further, and whether there will be follow-up contact with the US Treasury or actual intervention. After the US-Japan joint intervention in August, Katayama's latest remarks increased verbal pressure on the US dollar against the yen, but in the absence of clear level guidance and concrete action, traders may continue to test the authorities' resolve and probe the intervention threshold, thereby intensifying short-term exchange rate volatility.

Summary

Japanese Finance Minister Katayama said Japan and the United States agreed to strengthen cooperation, will continue to communicate closely with the US Treasury to ensure an orderly foreign exchange market, and said an undervalued yen is a problem. She denied that the Takaichi government is reflationist, stressed that interest rates are determined by the market, and said the Ministry of Finance will communicate closely with bond market participants. These remarks reinforced the message that Japanese officials are closely watching the exchange rate and coordinating with Washington. The US dollar has recently traded near 157 against the yen, recovering toward 158. Traders will watch whether the tone hardens if the yen weakens further, and whether there is follow-up contact with the US Treasury. After the August joint intervention, Katayama's remarks increased verbal pressure on the US dollar against the yen, but the lack of concrete action means traders may continue to test official resolve. In the future, attention should be paid to yen exchange rate movements, follow-up US-Japan communication, and whether Japan's Ministry of Finance takes actual action. (USD/JPY daily chart, source: Yihuitong) At 11:09 Beijing time, the US dollar was quoted at 157.34/35 against the Japanese yen.