Japan's Minister of Finance: Ready to intervene in foreign exchange, and the joint statement with the US remains in effect

The Zhitong Finance App learned that Japan's Finance Minister Katayama Satsuki said that if the foreign exchange market fluctuates in a disorderly manner, the Japanese authorities are ready to take countermeasures, and that they will act in accordance with an existing agreement with the corresponding US officials. At this point, there is still one day until the US holds midterm elections.

“If there is disorderly fluctuation or excessive speculative behavior, we will act,” Katayama said at a press conference on Monday. “We have also been coordinating and discussing with the US quite frequently, and it is expected that they will continue to respond in this way.”

At the time of Katayama's speech, the United States will hold elections on Tuesday to determine the leadership of both houses of Congress. Polls and forecasting markets show that the Democratic Party is expected to take back the House of Representatives, while the Senate's ownership is less certain.

If the Democratic Party sweeps Congress, it may restrict President Trump's fiscal agenda, thereby depressing US Treasury yields and the US dollar, thereby supporting the yen.

“But the president and his cabinet members will not be replaced immediately; my counterpart will probably be the same person,” Katayama said. “We have issued a joint statement and will continue to act in accordance with it. This also applies at this moment.”

If the Democratic Party tightens scrutiny of AI investment, data center construction, and energy costs, Asian stock markets, especially AI-related stocks, may also be under pressure. This is likely to drag down semiconductor companies in Japan, South Korea, and Taiwan as the market's concerns about the sustainability of the AI boom are deepening.

Geopolitical risks are likely to further complicate market responses. The loss of the Republican Party may prompt Trump to rely more heavily on executive power and take tougher positions on tariffs, Iran, and Ukraine. Renewed tension with Iran may push up oil prices and drag down the Japanese stock market and overall economy.

Trump has hinted that the attack on Iran may be stepped up after the election, but US Secretary of State Rubio said on Saturday that no decision has been made on a new attack, and Trump favors a diplomatic solution.

Katayama reiterated that Trump and Prime Minister Sanae Takaichi shared their concerns about the weakening yen, and quoted communication between the two at the September Leaders' Summit. Katayama added that current market conditions have improved compared to when the yen fell below 160 to $1, but declined to comment on the specific exchange rate level. The yen traded around 157.84 against the US dollar in early Monday trading.

“It is important to resolutely prevent excessive volatility, speculative actions, and disorderly market fluctuations,” Katayama said. “I believe that the two authorities will definitely not waver in this regard as they pursue their respective policy goals.”