According to reports, the U.S. Treasury Department has placed Japan on its currency manipulation monitoring list in its semiannual currency report released on Thursday. This action comes despite not designating any country as a currency manipulator. The criteria for inclusion on the monitoring list include significant bilateral trade surpluses with the U.S., global current account surpluses exceeding 3% of GDP, and persistent one-sided intervention in currency markets amounting to more than 2% of GDP.
Japan’s large bilateral trade and current account surpluses were cited as reasons for its inclusion on the monitoring list. However, the report did not heavily criticize Japan’s intervention actions in April and May to stabilize the yen, despite spending a record 9.8 trillion yen (approximately $620 billion) during this period.
Japanese officials responded by stating that inclusion on the monitoring list does not necessarily indicate a problem with Japan’s currency policies. They emphasized the importance of stable exchange rates reflecting economic fundamentals and pledged to continue monitoring the forex market closely while engaging in discussions with other countries regarding exchange rate policies.
The yen has recently weakened significantly against the dollar, prompting concerns about Japan’s future actions to support its currency amid limited intervention capacity. Despite these developments, Japan’s Finance Minister noted that the U.S. did not consider Japan’s forex policies problematic, and Japan would adhere to G7 agreements and maintain communication with other nations to prevent excessive and disorderly forex fluctuations.
The situation underscores the challenges Japan faces in managing its currency amidst global economic conditions and exchange rate dynamics.
