The current US and Japanese stocks fluctuate while hovering.
2025-05-21
■ Considering the US government's tariff policy and monetary policy, should we be wary of a correction in the appreciation of the US dollar?
■ The US dollar/yen may be indecisive in the near term due to the US trade negotiations and the direction of Japan-US financial policies.
At the Japan-US Finance Ministers' meeting held on April 24, Japanese Finance Minister Kato and US Treasury Secretary Benson held their first face-to-face meeting and had a fruitful discussion on several bilateral issues lasting about 50 minutes. During the meeting, (1) both sides reaffirmed that exchange rates should be determined by the market and that excessive fluctuations or disorderly changes could negatively impact economic and financial stability; (2) in the ongoing Japan-US trade negotiations, both sides agreed to continue maintaining close and constructive consultations on exchange rate issues. At this time, the US Treasury Secretary also made it clear that "there will never be a monetary target" and did not put forward the requirement to "correct the depreciation of the yen."
Regarding the Group of Seven (G7) Finance Ministers and Central Bank Governors Meeting to be held from the 20th to the 22nd, some speculate that a coordinated action similar to the "Plaza Accord 2.0," namely the "Mar-a-Lago Agreement," may be formed to correct the appreciation of the US dollar, but this expectation seems somewhat excessive. However, the policy paper released by Milan, Chairman of the President's Council of Economic Advisers (CEA), in November last year, pointed out that the US dollar has been overvalued as an international benchmark currency for a long time, resulting in a decline in trade competitiveness and a structural imbalance. To address this imbalance, he proposed tariff and monetary policy recommendations. Additionally, reflecting on the previous US-South Korea trade negotiations, the exchange rate issue was listed as a significant concern, which led to a sharp appreciation of the Korean won and a decline in the US dollar. This background has also caused the market to continue worrying that the current Japan-US Treasury Ministers' meeting may lead to a correction in the appreciation of the US dollar and a strengthening of the yen.
Since April 21, the US dollar/yen has fluctuated up and down for four consecutive weeks, rising overall from the second half of 139 yen to the second half of 148 yen, but is currently temporarily stuck in a stalemate between 144 and 145 yen. Although the market expects that the US interest rate hike will be postponed and the Japanese interest rate hike may also be delayed, which supports the appreciation of the US dollar and the depreciation of the yen, in the short term, the direction of the Japan-US trade negotiations and the upcoming 90-day deadline for the US and China to reduce tariffs on each other in July still create an outlook full of uncertainty. It is anticipated that the USD/JPY will fluctuate up and down and rise and fall in the short term due to the tug-of-war between bullish and bearish news.
■ The US dollar/yen may be indecisive in the near term due to the US trade negotiations and the direction of Japan-US financial policies.
At the Japan-US Finance Ministers' meeting held on April 24, Japanese Finance Minister Kato and US Treasury Secretary Benson held their first face-to-face meeting and had a fruitful discussion on several bilateral issues lasting about 50 minutes. During the meeting, (1) both sides reaffirmed that exchange rates should be determined by the market and that excessive fluctuations or disorderly changes could negatively impact economic and financial stability; (2) in the ongoing Japan-US trade negotiations, both sides agreed to continue maintaining close and constructive consultations on exchange rate issues. At this time, the US Treasury Secretary also made it clear that "there will never be a monetary target" and did not put forward the requirement to "correct the depreciation of the yen."
Regarding the Group of Seven (G7) Finance Ministers and Central Bank Governors Meeting to be held from the 20th to the 22nd, some speculate that a coordinated action similar to the "Plaza Accord 2.0," namely the "Mar-a-Lago Agreement," may be formed to correct the appreciation of the US dollar, but this expectation seems somewhat excessive. However, the policy paper released by Milan, Chairman of the President's Council of Economic Advisers (CEA), in November last year, pointed out that the US dollar has been overvalued as an international benchmark currency for a long time, resulting in a decline in trade competitiveness and a structural imbalance. To address this imbalance, he proposed tariff and monetary policy recommendations. Additionally, reflecting on the previous US-South Korea trade negotiations, the exchange rate issue was listed as a significant concern, which led to a sharp appreciation of the Korean won and a decline in the US dollar. This background has also caused the market to continue worrying that the current Japan-US Treasury Ministers' meeting may lead to a correction in the appreciation of the US dollar and a strengthening of the yen.
Since April 21, the US dollar/yen has fluctuated up and down for four consecutive weeks, rising overall from the second half of 139 yen to the second half of 148 yen, but is currently temporarily stuck in a stalemate between 144 and 145 yen. Although the market expects that the US interest rate hike will be postponed and the Japanese interest rate hike may also be delayed, which supports the appreciation of the US dollar and the depreciation of the yen, in the short term, the direction of the Japan-US trade negotiations and the upcoming 90-day deadline for the US and China to reduce tariffs on each other in July still create an outlook full of uncertainty. It is anticipated that the USD/JPY will fluctuate up and down and rise and fall in the short term due to the tug-of-war between bullish and bearish news.