Yen, BOJ’s rate policy may remain focus in Japan-US trade talks

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WASHINGTON: Japan could withdraw US pressure for strong yen in bilateral finance talks on Thursday, but a keen eye on the details of the meeting shows that currency currencies and the Bank of Japan’s interest rate policy are wider trade negotiations.

Talking to reporters after talking to US Treasury Secretary Scott Basant on Thursday, Japanese Finance Minister Kitsnobo Kato said he did not discuss exchange rates or framework for handling the yen rates.

According to a Japanese Ministry of Finance official, Japan is deliberately weakening the yen, no charges were made by the United States.

But the 50 -minute meeting with Cato Basant was strictly limited to the details of the International Monetary Fund and the World Bank Spring meetings in Washington.

When asked if the United States made any special requests from Japan, Kato said: “I cannot comment on it because it goes straight to the original discussions.”

Still, there were some indicators.

For one, Kato said that Japan and the United States would continue to close and constructive dialogue on exchange rates in connection with the ongoing bilateral trade talks. – Some language analysts found that Washington could demand the yen as part of a wider trade negotiation.

Prior to the meeting, Japanese trade negotiators Russian Akazawa’s scheduled visit to Washington next week was for the second round of bilateral trade talks, which could prove to be difficult for the United States.

Japan has been accused of deliberately keeping a weak yen, focusing on President Donald Trump’s US trade deficit and his past remarks, has raised market expectations that Tokyo will stabilize the dollar to stabilize the yen and stabilize us.

“President Trump is convinced that Japan and China are deliberately outdooring their currencies,” said Susooshi Yono, a senior economist at the NLI Research Institute.

“If the trade talks between Akazawa and Basant are not good next week, Washington’s attention can once again divert on the exchange rates,” he said.

The Treasury Department said in a redout on Friday that Basant and Kato have discussed several bilateral issues, including bilateral trade. “He confirmed his intention to continue his close consultation on issues related to exchange rates,” he said.

Increase the BoJ rate

Another key symbol was Kato’s comment that it described Basant Japan’s recent economic developments “including” wages, including wages. ” He added that in doing so, he also talked about Japan’s “prices”.

This shows that debates have touched Japan’s monetary policy, as both wages and prices by BOJ are key to the time and speed of further increase in interest rates.

Sources have told Reuters that slowly the speed in which the BOJ is increasing the cost of borrowing at a very low level may be on fire in bilateral trade talks.

The BOJ’s decision was the key to the stable rise in wages and inflation last year and increasing its short -term interest rate by 0.5 % in January.

Inflation has exceeded 2.0 % of its target for three consecutive years, and this year major companies have continued to offer to increase bumper salaries, the BOJ has indicated its preparation for the increase in rates.

But the route to the central bank rate has been complicated by Trump’s prices, which threatens to remove Japan’s critical economic recovery from the track, and analysts have prepared to overtake the next rate.

During the warning to promote the economic uncertainty, Bob’s Governor Kazu Oda reiterated the central bank’s preparations to maintain the hiking rate on Thursday.

“It is noteworthy that Kato and Basant discussed Japan’s wage progresses,” said Katasohiro Oshima, chief economist, Mitsubishi Afj Morgan Stanley Securities, adding that Yoda’s remarks suggest that BOJ rates are up.

“A winning wage for Japan’s economy, winning from the point of view of exchange rates for the United States, a win for Japanese households, which will see the increase in shopping power, and the rate will be easier for the BOJ.”