The U.S. Department of the Treasury stated on Wednesday that Treasury Secretary Scott Bassett met with Japanese Finance Minister Shigetsugu Katayama on Monday and "emphasized the necessity of formulating and communicating sound monetary policies."
The department noted in a summary of the meeting that "given the inherent drawbacks of excessive exchange rate volatility, the Treasury Secretary also underscored the need to establish and convey sound monetary policies."
Bassett's comments were made as markets closely monitor whether Japan will intervene to reverse the yen's downward trend, after the currency hit a 18-month low earlier this week.
The yen rebounded on Wednesday, following renewed verbal warnings from Minister Katayama, who stated that government officials would "take appropriate measures against excessive currency fluctuations, without ruling out any options."
On Wednesday, the yen appreciated by 0.43% against the U.S. dollar to 158.46 yen per dollar, after having fallen to a low of 159.45 yen per dollar, its weakest level since July 2024.
Following her meeting with Bassett in Washington, Katayama indicated that the two shared concerns over what she described as the recent "one-sided depreciation" of the yen.
Bassett himself has repeatedly suggested that the yen's depreciation could be better addressed by the Bank of Japan accelerating its pace of interest rate hikes. In October of last year, he urged the government of Sanae Takaichi, a proponent of loose monetary policy, to allow the central bank to raise rates to prevent excessive yen weakness.
The Bank of Japan raised its interest rate from 0.5% to 0.75% in December, citing progress towards achieving its 2% inflation target.
Critics argue that the slow pace of interest rate increases is a contributing factor to the yen's weakness. While a weaker yen benefits exports, it also increases the cost of living for citizens due to higher import prices.
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