America and Japan promise not to manipulate currency exchange rates

US Treasury Secretary Scott Besent and Japanese Finance Minister Katsunobo Kato confirmed in a joint statement their primary commitment to abandoning markets that determine exchange rates, and did not target them to reach a competitive advantage. “The two parties have renewed their commitment to the group of seven promise to remain financial and monetary policies aimed at achieving local goals using internal instruments, and not target exchange rates for competitive purposes,” according to the statement checking the talks of the two ministers. However, a space for intervention in the foreign exchange market, however, kept the two ministers open in certain circumstances for intervention, in accordance with previous data, and emphasized that the intervention should be limited to dealing with excessive fluctuations or irregular movements in the foreign exchange market. The statement added that the two ministers will continue to discuss the total issues and files related to currencies during the next phase. The statement is issued about a week after US President Donald Trump signed an executive order, according to which the last trade agreement between the two countries came into effect. Also read: Trump signs an executive order to apply 15% fees to Japan. The statement indicates that the two countries are trying to keep the currency file away from Trump’s possible efforts to reduce the US trading deficit in the future. The statements also represent a reminder that the Trump administration is careful after the Japanese policy and currency movements. Trump criticized the Japanese yen that Trump had previously commented on the yen and said in March that the weakness of the Japanese currency puts the United States in an unfair position. Eat the last statement of the two ministries in more detail, more than usual, tools that can be considered a way to manipulate the currency, but it does not indicate the need for any change in Japanese monetary policy. The yen fell slightly against the dollar after the statement was issued. “I think it’s very important that we have to confirm these points this time clearly,” Kato told Tokyo reporters on Friday. The transparency of monetary policy “The United States and Japan renewed in the joint statement to emphasize the importance of accepting a transparent policy in the foreign exchange market, while maintaining the joint understanding of the existing understanding of the exchange rate management.” The statement pointed out that the overall provident procedures and measures related to capital flow, and the government’s investment instruments, including pension funds, should not be used to target currency levels to achieve competitive profits, in a sign that reflects US practitioner control on policy. Japan is still listed on the list of currency guides, according to the latest report released by the US Treasury during June. Although Japan did not reach in the last report, the limit that the United States intends to interfere in the currency has met the size of the surplus on the current account and its trade surplus with the United States accurate monitoring criteria. Over the past three years, Tokyo has spent about $ 150 billion in efforts to support the yen, and the last intervention during July last year. Despite a series of increases, interest rates in Japan are still much lower than world levels, which form a print factor on the currency. Although the statement is considered the same as the same in cases of high or low currencies, the movements that lead to the strengthening of the currency are usually less problematic in international trading partners, because it makes Japanese export more expensive and less competitive. Kato told reporters that the last joint statement will not change Japan’s approach to the implementation of any interference in the future currency market. Investors are awaiting, away from the last statement, said in the currency market interventions, investors await any indications that the United States tend to prefer a greater power from Japanese yen. In August, Pesent said the Bank of Japan is late to keep up with inflation development, and expects the bank to raise interest rates again, a statement in which some observers have seen an indication that he may also try to increase the value of the Japanese yen before the currencies. The Japanese interest expectations are scheduled to meet the Bank of Japan next week, amid wide expectations to keep interest rates unchanged in the light of the state of political instability, as the ruling party is preparing to choose a new leader after Premier Shighgero Ishiba announced his resignation. However, the central bank explained that it would continue to raise interest rates as the economy developed as expected, which would make investors try to expect the timing of the next step. Also read: The Bank of Japan keeps the benefit unchanged and increases its expectations for inflation possible for the yen, is likely that the expected discount in US interest rates will contribute to reducing the gap between borrowing costs in the two countries, which helps to support the yen in the coming months. Ishtiro Miura, the first general manager of investments in the Strategic Investment Department of Nissay Asset Management: “The implicit message from the US side may carry that the Bank of Japan, instead of interfering in the exchange market to stop the fall, will face it by raising interest rates.”