Takaichi Says Weak Yen Is Harming US Trade After Trump Talks

Key Points

• Japanese Prime Minister Sanae Takaichi said US President Donald Trump raised concerns about the weak yen during their recent meeting in New York.
• Takaichi said the American side linked yen weakness with difficulties facing US trade.
• Takaichi told NTV that she regarded an undervalued yen as a problem in principle, while avoiding specific comments about currency-market levels.
• Finance Minister Satsuki Katayama separately confirmed that Trump had expressed concern about the yen’s depreciation.
• US Treasury Secretary Scott Bessent has publicly argued for a stronger yen reflecting Japan’s economic fundamentals.
• Bessent and Katayama have agreed to maintain communication over currency markets.
• Japan and the United States conducted a joint currency intervention after the yen traded around ¥164 to the dollar, marking their first joint action to support the yen in 28 years.
• Takaichi said Japan’s longer-term response should centre on raising potential growth, strengthening supply capacity and improving economic competitiveness.
• The developments place the yen, monetary policy, fiscal policy and US-Japan trade relations in close focus for businesses and financial markets.
• Recent reporting has also highlighted differences over how Japan should address the economic factors contributing to yen weakness.

Japan Daily Sun (JDS) October 2, 2026 – Japanese Prime Minister Sanae Takaichi has said US President Donald Trump told her during their recent New York meeting that the weakness of the Japanese yen was creating difficulties for US trade, adding a new dimension to Washington’s public concern over Japan’s currency. Takaichi said she responded that an undervalued yen was, as a general principle, a problem. Her comments, reported by Sakura Murakami of The Japan Times in a Bloomberg-sourced report published on October 2, follow separate remarks from Japanese Finance Minister Satsuki Katayama confirming that Trump had raised concerns about the yen during his meeting with Takaichi.

What did Takaichi say about the weak yen and US trade?

According to Sakura Murakami of The Japan Times, reporting on Takaichi’s interview with broadcaster NTV, the Japanese prime minister said the leaders discussed difficulties facing American trade because of the weak yen. Takaichi was responding to a question about whether Tokyo and Washington were coordinating their approaches to the currency’s weakness.

Takaichi said she told Trump that an undervalued yen was generally a problem. Her comments are significant because they provide a further account of the currency discussion between the two governments following the summit in New York.

A separate report by Jiji Press, published by Nippon.com and dated September 25, said Takaichi had told reporters that Trump said US trade had become difficult because of the yen’s depreciation. Jiji Press reported that Takaichi described yen undervaluation as a problem in general terms but said monetary and fiscal issues were not discussed at the bilateral summit.

The accounts from Takaichi and Katayama therefore establish that the yen was raised during the US-Japan leadership meeting, although the publicly disclosed descriptions do not indicate that Japan agreed to a particular exchange-rate target or specific monetary-policy action.

How did Finance Minister Satsuki Katayama describe Trump’s concerns?

Finance Minister Satsuki Katayama provided an earlier account of the discussion shortly after the New York meeting.

According to Erica Yokoyama of The Japan Times, citing Bloomberg, Katayama said on September 25 that Trump had expressed concern about the weakness of the yen during his meeting with Takaichi. Katayama said Takaichi had responded that an undervalued yen was problematic.

Reuters, in a report by Makiko Yamazaki published on September 25, also reported Katayama’s account. Reuters said the finance minister disclosed the details after consulting the Prime Minister’s Office, highlighting the sensitivity of the currency discussion.

Katayama also said she would continue coordinating with US Treasury Secretary Scott Bessent on the issue. The statements placed currency policy more visibly within the broader economic relationship between Tokyo and Washington.

The Japanese government’s position, as described in the reports, does not amount to an announcement of a specific exchange-rate policy. Instead, officials have continued to emphasise economic fundamentals, communication with Washington and Japan’s own policy decisions.

What position has Scott Bessent taken on the yen?

US Treasury Secretary Scott Bessent has repeatedly expressed support for a stronger Japanese currency.

According to Jiji Press, Bessent said after a September 25 discussion with Katayama that the two sides had discussed the desirability of a strong yen reflecting Japan’s economic fundamentals. He also said the officials discussed the importance of maintaining close communication on currency markets.

The Japan Times reported that Bessent has repeatedly suggested that the Bank of Japan should raise interest rates to help the yen reach what he considers an appropriate level. In comments cited by the newspaper, Bessent also indicated that he had substantial insight into Japanese policymakers’ intentions and challenged currency speculators to take positions against his assessment.

Japanese officials have generally maintained that US statements are not determining Japan’s domestic monetary-policy decisions.

This distinction is important because exchange rates are influenced by multiple factors, including interest-rate differentials, expectations about central-bank policy, economic growth, inflation and investor demand for currencies. Statements by foreign officials can affect markets, but they do not themselves constitute Japanese monetary policy.

What happened when the yen reached around ¥164 to the dollar?

The latest comments also come against the background of direct intervention in currency markets by Japan and the United States.

The Japan Times reported that Tokyo and Washington conducted a joint intervention after the yen began trading at around ¥164 against the US dollar. According to the report by Sakura Murakami, the operation was the first joint action by the two countries to support the Japanese currency in 28 years. Trump subsequently described the intervention as a sign of friendship.

A separate Reuters report by Atsushi Mimura, published on September 28, said Japan’s top currency diplomat had warned markets to take seriously the joint position expressed by Tokyo and Washington over the yen’s decline. Reuters reported that the yen had remained under pressure despite the Bank of Japan raising its policy rate to 1.25%, while the interest-rate gap between Japan and the United States continued to influence the currency.

The intervention therefore forms part of a wider sequence of events rather than being an isolated development. Government statements, central-bank decisions and actual market operations have all contributed to the recent focus on the yen.

Why has the yen remained under pressure despite higher Japanese interest rates?

The Bank of Japan’s monetary-policy direction is another factor in the currency debate.

Reuters reported on October 1 that several Bank of Japan policymakers had argued at the September policy meeting for faster or more frequent interest-rate increases. According to Reuters, some policymakers believed underlying inflation was approaching or exceeding the central bank’s 2% target and that additional tightening could be justified.

However, Reuters also reported that there was opposition to a faster pace of rate increases. Some policymakers pointed to weak consumption and subdued service-sector inflation, while a Cabinet Office representative urged caution over the cumulative effects of earlier increases.

The report said Economy Minister Minoru Kiuchi, who is associated with Takaichi’s expansionary economic approach, appeared opposed to further increases because of concerns about the effects on economic growth and government spending. Reuters reported that perceptions of resistance to additional rate increases contributed to yen weakness by reducing expectations of aggressive monetary tightening.

This illustrates the policy challenge facing Japanese authorities. A stronger yen can reduce the domestic cost of imported goods and energy, while higher interest rates can affect borrowing costs, consumption, investment and government finances.

What did Takaichi say Japan should do instead of focusing only on the currency?

Takaichi’s comments focused on strengthening Japan’s economy rather than announcing a new currency measure.

According to Murakami’s The Japan Times report, Takaichi said Japan wanted to raise its potential growth rate and strengthen its supply capabilities through investment in risk management and growth areas. She argued that improving the competitiveness of the Japanese economy would ultimately contribute to confidence in the yen.

She also reiterated that her government intended to pursue a strong economy alongside sustainable public finances through what she described as responsible and proactive fiscal policy.

Jiji Press separately reported that Takaichi maintained that position after the Trump meeting, saying the government intended to pursue economic strength and fiscal sustainability at the same time.

The approach differs from treating the exchange rate as the only policy objective. Instead, the government’s stated position connects currency confidence with economic growth, productive capacity and fiscal sustainability.

What concerns have emerged over Japan’s fiscal policy?

The yen discussion has also been linked to questions surrounding Japan’s public finances.

Reuters reported on October 1 that requests for Japan’s next fiscal-year budget had risen to about ¥143 trillion, close to pandemic-era levels. The report said uncertainty remained over how the government would finance measures including a temporary suspension of a food levy and increased defence spending.

Reuters said the scale of the budget requests had contributed to concerns in bond markets and raised questions about potential increases in government debt issuance. Takaichi said the final budget would be assessed carefully, with priority given to effective policies and financial sustainability.

Earlier Reuters reporting by Tamiyuki Kihara, Makiko Yamazaki, Takaya Yamaguchi and Leika Kihara also examined the discussions between Bessent and Japanese officials over fiscal policy and monetary policy. The September 18 report said people familiar with the situation described Bessent as pressing Japan to address factors behind the yen’s decline, including concerns surrounding fiscal expansion and the Bank of Japan’s interest-rate policy.

Those claims were attributed by Reuters to people familiar with the situation rather than presented as statements formally announced by either government.

How could the currency dispute affect US-Japan trade?

The latest statements put the exchange rate directly into the context of bilateral trade.

A weaker yen can change the relative prices of Japanese exports and imported goods when measured in dollars. For US businesses purchasing Japanese goods, movements in the yen-dollar exchange rate can therefore affect costs, while Japanese companies importing energy, raw materials and other products can face different cost pressures when the yen weakens.

The Trump administration’s concern, as described by Takaichi and Katayama, centres on the effect of the exchange rate on US trade. At the same time, Japanese policymakers face domestic consequences from a weaker currency, particularly through import prices.

The issue is consequently not limited to foreign-exchange traders. Manufacturers, exporters, importers, investors and companies with operations in both countries can be affected by changes in the yen-dollar exchange rate.

The policy response also matters. If markets anticipate further Japanese interest-rate increases, the resulting change in interest-rate expectations could affect currency valuations. Conversely, continued uncertainty over the timing of future Bank of Japan decisions could leave exchange-rate movements sensitive to economic data and official statements.

What is the significance of continued US-Japan currency communication?

The recent exchanges indicate that currency issues have become an established part of high-level US-Japan economic discussions.

Bessent’s statement following his conversation with Katayama explicitly referred to the desirability of a strong yen and continued communication over currency markets.

At the same time, Takaichi has not announced that Japan will change its fiscal or monetary policy because of US pressure. Her comments instead emphasise domestic economic competitiveness and supply capacity.

This distinction will be important for businesses and markets. A statement expressing concern over the yen is different from an agreement on a target exchange rate, while currency intervention is different from a permanent change in monetary policy.

The available public statements therefore show increased coordination and communication, but they do not establish a publicly announced US-Japan exchange-rate target.

What is the background to the yen dispute?

The yen has experienced substantial volatility over recent years, with the currency’s weakness frequently linked to the gap between Japanese and US interest rates and expectations surrounding monetary policy.

Japan has periodically intervened in foreign-exchange markets to counter sharp yen movements. The joint US-Japan intervention described by The Japan Times represents a notable development because the two governments had not taken such joint action to support the yen for 28 years.

The currency also weakened again after the intervention. A Japanese government-related offering document published in August recorded that the yen had moved from around ¥164 against the dollar before the late-July intervention to roughly ¥155 afterwards, before weakening again towards the ¥159 level by August 14.

By late September, officials in both Tokyo and Washington were again publicly discussing the currency. Reuters reported that Japan’s senior foreign-exchange official Atsushi Mimura said markets should pay attention to the warning from both governments, while also noting the continuing influence of the US-Japan interest-rate gap.

The present dispute therefore follows months of policy discussion rather than beginning with the latest Takaichi interview.

How could the latest developments affect businesses and currency-market participants?

For businesses involved in US-Japan trade, the immediate significance is that currency policy is receiving sustained attention from officials in both countries. Companies exposed to the yen-dollar exchange rate may need to account for the possibility of continued volatility as markets assess Japanese monetary policy, US policy and government statements.

Japanese exporters and US importers may face different effects from currency movements depending on their contracts, pricing arrangements and exposure to exchange-rate changes. Japanese importers, particularly those purchasing goods or commodities priced in US dollars, can also be affected when the yen weakens.

For financial-market participants, the key variables include the Bank of Japan’s future rate decisions, US monetary policy, official intervention signals and developments in Japanese fiscal policy. Recent Reuters reporting shows that markets have already been sensitive to expectations surrounding additional Japanese rate increases.

The direction of the yen will therefore depend on a combination of policy decisions and market expectations rather than on any single statement from Tokyo or Washington.

What developments should businesses monitor next?

Businesses with significant yen exposure will be watching future Bank of Japan decisions, statements from Japanese finance officials and further communication between Katayama and Bessent.

They will also be monitoring US Treasury comments, Japanese foreign-exchange intervention signals and movements in the US-Japan interest-rate differential.

Takaichi’s stated emphasis on economic competitiveness and supply capacity provides another longer-term area to monitor. If those policies result in changes to investment, production capacity or growth expectations, they could eventually influence perceptions of Japan’s economic fundamentals.

For now, the governments’ public statements establish concern over yen weakness and a commitment to continued communication, but they do not provide a fixed timetable or publicly announced target for the currency.

Prediction: How could this development affect US-Japan trade and currency-market participants?

The immediate effect is likely to be continued attention to the yen as an issue connecting US-Japan trade relations with Japanese monetary and fiscal policy. The recent statements do not establish a guaranteed future movement in the currency, so the precise market outcome remains dependent on subsequent policy decisions and economic conditions.

If communication between Washington and Tokyo continues, businesses and investors may have to account for official comments more closely when assessing yen exposure. Further Bank of Japan decisions could also influence expectations about the interest-rate gap between Japan and the United States.

For companies engaged in bilateral trade, the practical issue will remain exchange-rate volatility and its effect on costs, revenues and pricing. For policymakers, the latest comments demonstrate that the yen is being discussed not only as a domestic Japanese economic issue but also as part of wider US-Japan trade relations.

The available evidence does not establish that either government has agreed to a specific future exchange-rate level. The next significant indicators will therefore be official policy decisions, currency-market movements and any further announcements concerning intervention or US-Japan coordination.