U.S. President Donald Trump's desire to influence the yen's exchange rate in the ongoing trade negotiations with Japan is likely to create challenges for both nations, analysts warned.
Trump previously accused Japan of intentionally devaluing the yen, which he argues gives Japan an unfair trade advantage. However, experts caution that shifting the value of the yen is a delicate issue that could have unintended economic consequences. Raising interest rates rapidly to boost the yen could harm Japan’s fragile economic recovery and undermine central bank independence. Conversely, Japan could sell U.S. dollars to strengthen its currency, but this could risk damaging its vast investments in U.S. debt, at a time when financial markets are already volatile.
Citigroup analysts noted that while Japan's currency remains undervalued, targeting it through a coordinated devaluation effort, known as the "Mar-a-Lago Accord," may hurt Japan's interests, especially with the current fragile financial environment. Trump has already imposed a 25% tariff on Japanese cars, and the Nikkei share index has dropped 6% since its announcement, highlighting the potential economic impact.
The yen recently gained some ground against the dollar, which has caused speculative bets on further yen strength. However, experts, such as Yunosuke Ikeda of Nomura, warn that trying to influence the dollar's value in the current environment could destabilize U.S. Treasury markets, where international investors hold a massive amount of U.S. government debt.
While Japan’s central bank desires a stronger yen, its efforts are focused on improving industrial competitiveness, and there are no immediate plans to manipulate the currency. With elections looming in Japan, the government's hands are tied on aggressive monetary policy adjustments, making Trump's expectations difficult to fulfill in the short term.
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White House economic adviser Kevin Hassett said on Friday that early signs ahead of this weekend’s U.S.-China trade talks in Switzerland appear positive, with both sides showing mutual respect and a constructive tone.
A new U.S.-supported initiative to deliver humanitarian aid into Gaza is expected to start operating shortly, U.S. Ambassador to Israel Mike Huckabee said Friday, though specific details are yet to be made public.
U.S. President Donald Trump signaled support for steep tariffs on Chinese imports, calling 80% levies “right” ahead of high-level trade talks in Geneva aimed at easing escalating tensions between Washington and Beijing.
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White House economic adviser Kevin Hassett said on Friday that early signs ahead of this weekend’s U.S.-China trade talks in Switzerland appear positive, with both sides showing mutual respect and a constructive tone.
A new U.S.-supported initiative to deliver humanitarian aid into Gaza is expected to start operating shortly, U.S. Ambassador to Israel Mike Huckabee said Friday, though specific details are yet to be made public.
U.S. President Donald Trump signaled support for steep tariffs on Chinese imports, calling 80% levies “right” ahead of high-level trade talks in Geneva aimed at easing escalating tensions between Washington and Beijing.
Kazakhstan and Pakistan signed a series of trade and transit agreements during a high-level business forum in Karachi, paving the way for expanded commercial cooperation and long-term logistics development between the two countries.
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