The United States Department of the Treasury and the Japanese Ministry of Finance have announced their intention to continue close consultations on macroeconomic and foreign exchange issues. Both parties reiterated that exchange rates should be determined by the market, and highlighted concerns that excessive volatility or disorderly movements in exchange rates can negatively impact economic and financial stability.
The two ministries reaffirmed their commitment under the IMF Articles of Agreement to avoid manipulating exchange rates or the international monetary system for the purpose of preventing effective balance of payments adjustment or gaining an unfair competitive advantage.
They also restated their support for the G7 agreement that fiscal and monetary policies will focus on domestic objectives using domestic tools, rather than targeting exchange rates for competitive reasons. Additionally, they agreed that any macroprudential or capital flow measures would not be used to target exchange rates for such purposes.
Other government investment vehicles, including pension funds, will continue investing abroad with a focus on risk-adjusted returns and diversification, rather than aiming to influence exchange rates competitively. The statement further noted consensus that interventions in foreign exchange markets should only be considered to address excess volatility or disorderly movements in exchange rates, whether related to depreciation or appreciation.
Both governments emphasized the importance of transparent practices regarding exchange rate policies. They committed to publicly disclosing any foreign exchange intervention operations at least monthly. Furthermore, data on foreign exchange reserves and forward positions will also be released monthly, while information about the currency composition of reserves will be published annually in accordance with IMF standards.
