Exclusive-Japan's currency diplomat Mimura urges markets to heed 'very clear' warning on yen

Japan's top currency diplomat Atsushi Mimura urged markets on Monday to consider the clear message sent by Tokyo and Washington regarding the yen. US President Donald Trump had raised concerns about the weak yen at a summit with Japanese Prime Minister Sanae Takaichi. Finance Minister Satsuki Katayama had detailed the leaders' talks on currencies, stating that Japan's leaders had delivered a very clear message.

Mimura emphasized that markets should take this message at face value and would monitor closely whether they continued to do so. While he did not comment on potential intervention to support the yen, Mimura expressed dissatisfaction with the recent declines and maintained that Tokyo remained vigilant against the risk of further currency weakness.

The US and Japan reaffirmed their shared concern over the yen's undervaluation in phone talks, and Mimura reaffirmed Japan's readiness for coordinated intervention, dismissing concerns about funding limitations. The weak yen has raised concerns about the cost of imports and inflation, but attempts by the Bank of Japan to raise interest rates have not been successful.

The US Federal Reserve's rate hikes and hawkish communication have further impacted the yen's value, as the gap between Japanese and US policy rates has narrowed over time. Japan and the US had previously conducted a joint intervention to prevent the currency from reaching near 40-year lows, and Mimura highlighted the strong bilateral relationship between the two nations that extends beyond exchange rates.