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US Treasury and Japan Finance Ministry Reaffirm Commitment to Market-Driven Exchange Rates

Both nations pledge to avoid currency manipulation, uphold IMF and G7 commitments, and enhance transparency in foreign exchange interventions.

Summary

The US Treasury and Japan's Ministry of Finance released a joint statement vowing to maintain close consultations on macroeconomic and foreign exchange matters. They affirmed that exchange rates should be set by market forces and warned that disorderly currency shifts can undermine economic and financial stability. Both countries reiterated IMF obligations to avoid currency manipulation and emphasized the G7 pledge to direct fiscal and monetary policies toward domestic goals rather than using competitive devaluation. They also agreed to publicly disclose any foreign exchange interventions at least monthly.

Terms & Concepts
  • Exchange Rate Intervention: A government or central bank action to influence the value of its currency in the foreign exchange market.
  • G7 Pledge on Currency Policy: An agreement among the Group of Seven nations to avoid targeting exchange rates for competitive advantage and to focus on domestic economic objectives.
  • IMF Exchange Rate Commitments: International Monetary Fund member obligations to avoid currency manipulation for unfair trade advantages or to prevent balance of payments adjustment.