Yen Drops 0.5% After Yellen-Suzuki Meeting Avoids Currency Talk

The U.S. Treasury Department released a statement confirming that U.S. Treasury Secretary Janet Yellen and Japanese Finance Minister Shunichi Suzuki did not discuss currency levels during their meeting in Canada. This news led to a brief decline in the value of the Japanese yen.

The Treasury Department clarified on Wednesday that Yellen and Suzuki "reaffirmed their shared belief that exchange rates should be determined by the market and that the current dollar-yen exchange rate reflects fundamentals." The two officials met during the G7 finance ministers and central bank governors meeting held in Banff, Canada.

During their discussion, Yellen and Suzuki covered various topics related to U.S.-Japan economic relations, including global security and ongoing bilateral trade negotiations. Suzuki mentioned to reporters after the meeting, "We were able to have an in-depth discussion on the basic ideas of monetary policy. As before, we did not discuss currency levels."

The yen briefly fell by 0.5% against the dollar to 144.40 yen but has since recovered. Over the past few years, the Japanese Ministry of Finance has been actively working to prevent the yen from depreciating, and the latest statement helped Suzuki reduce the risk of rapid yen fluctuations.

The outcome of the meeting suggests that the U.S. has no significant objections to the yen's appreciation. Previously, Trump had accused Japan of gaining an unfair advantage by allowing its currency to depreciate.

A significant strengthening of the yen could increase the likelihood of an economic recession, particularly as tariffs continue to impact Japanese automakers. The two countries are currently in negotiations over a trade agreement. Trade concerns have already eroded consumer confidence, and a stronger currency could squeeze corporate profits and wage growth. Japan's economy contracted in the previous quarter, and the latest trade data indicate that exports may continue to drag on economic growth.

This was the second face-to-face meeting between Yellen and Suzuki in a month, following their meeting in April. As trade negotiations continue, Suzuki reiterated Japan's opposition to the Trump administration's tariff increases. Suzuki stated, "Japan deeply regrets the U.S. tariff measures and is concerned about whether they comply with the U.S.-Japan trade agreement. I strongly urge the U.S. to reconsider these measures."