The yen fell once again at the 160 mark! Japan's Finance Minister talks: Will “join forces” with the US Treasury to deal with unilateral fluctuations

The Zhitong Finance App learned that Japan's Finance Minister Katayama Satsuki said that after the yen once fell below a critical threshold, Ministry of Finance officials will continue to cooperate closely with their colleagues in Washington to take appropriate action against the unilateral and rapid fluctuations in the foreign exchange market when necessary.

Katayama Satsuki told reporters on Friday, “What we are currently seeing is sharp, one-sided fluctuations in the foreign exchange market.” “We will continue to cooperate closely with the US Treasury and respond appropriately.”

Prior to Katayama Satsuki's remarks, the yen once fell below the critical psychological threshold of 1 US dollar to 160 during the New York trading session on Thursday. This break has once again sparked speculation that Tokyo may interfere with the foreign exchange market as many times as it did earlier this year to support the local currency.

The yen has always been pressured by huge interest spreads between the US and Japan — the Bank of Japan's benchmark interest rate is 1.25%, which is more than 2.5 percentage points lower than the Federal Reserve.

Katayama Satsuki reiterated that Japan and the US maintain the same position on the exchange rate issue, and pointed out that US Treasury Secretary Scott Bessent has repeatedly expressed his preference for a strong yen reflecting the fundamentals of the economy. The leaders of the two countries also shared this view at the summit, she said.

Katayama Satsuki also said that she doesn't think there is a problem with the difference in the amount of money used when Japan and the US jointly interfered with the exchange rate on July 31. The US side revealed that the New York Federal Reserve bought 79.4 billion yen in the spot market by selling the euro, while Japan's purchase scale exceeded 5.5 trillion yen.

Furthermore, Katayama Satsuki said that it is still too early to comment on the defense spending plan. Earlier, Japanese media reported that the Japanese government may consider preparing a five-year budget of 50 trillion to 60 trillion yen starting in the 2027 fiscal year. The report said that Prime Minister Takaichi Sanae is cautious about implementing a drastic tax increase while planning to lower the food sales tax from April 2027.

Japan is revising its key national security documents before the end of the year. This process is expected to reveal the scale and pace of growth in defense spending over the next few years. Takaichi Sanae has already set the goal of increasing defense spending to nearly 2% of GDP, up to the fiscal year ending in March, two years ahead of schedule.

Earlier local media reports suggested that Japan is considering raising the five-year defense budget to 80 trillion yen, some of which increase may be raised by raising corporate taxes.

Katayama Satsuki said, “Discussions are still ongoing on what kind of capabilities Japan should strive to acquire in the next five years and what specific enhancements are needed to adapt to the new form of warfare.”