Japanese Finance Minister Katsunobu Kato said on Friday that he would seek to discuss foreign exchange issues with U.S. Treasury Secretary Scott Bessent on the understanding that excessive currency volatility is undesirable.
"We reaffirmed at our meeting on April 24 that foreign exchange rates should be set by markets and that excessive volatility has adverse impacts on economic and financial stability," Kato told parliament.
"We also agreed to continue close and constructive dialogue. ... Based on this common understanding that Japan and the United States have built, we hope to continue discussions," he said.
U.S. President Donald Trump's focus on addressing the trade deficit and his past criticisms of Japan's weak yen have heightened market concerns that Tokyo will face pressure to strengthen the yen against the dollar.
Japan and the United States have agreed to keep the thorny issue of currency rates separate from direct trade negotiations, setting aside the issues for talks between their finance ministers.
Kato has said if the meeting with Bessent goes ahead, they could naturally discuss foreign exchange as part of Japan's tariff negotiations with the United States.
Asked about potential portfolio reshuffle of Japan's U.S. treasury holdings, Kato said the government holds treasuries from the standpoint of achieving optimal asset management while securing enough liquidity.
Bloomberg cited the head of the influential opposition Democratic Party for the People as saying that Japan could offer to reinvest proceeds from maturing U.S. treasury holdings into super-long bonds in return for concessions on tariffs.
