A senior Bank of Japan official said on Tuesday that global markets are experiencing volatility due to uncertainty about U.S. tariff policies, but short-term liquidity has not fallen sharply.
“Unlike during the global financial crisis, we have not seen a sharp drop in short-term liquidity,” Akio Okuno, director of the Bank of Japan’s monetary policy bureau, said in parliament. “But the Bank of Japan will continue to closely monitor market developments and their impact on the global and domestic economies.”
Global stock, currency and bond markets have fluctuated sharply due to U.S. President Donald Trump’s repeated comments on tariffs, and some analysts believe that the recent sharp decline in U.S. Treasuries and the dollar shows that the market has lost confidence in the safe-haven status of U.S. assets.
Japan, for its part, is preparing for trade talks with the United States this week that may involve thorny monetary policy issues, and some officials privately expect Washington to call on Tokyo to support the yen.
Japanese Finance Minister Katsunobu Kato said both Japan and the United States believe that exchange rates should be determined by the market and that excessive and disorderly exchange rate fluctuations will have an adverse impact on economic and financial stability.
“I hope to continue the dialogue with the United States on the basis of this consensus,” Kato said in parliament. He declined to comment on what the two sides might discuss about exchange rates in bilateral trade talks.
Kato told an earlier news conference that he was preparing to attend the spring IMF and World Bank meetings later this month, where he may hold bilateral talks with foreign ministers, including those of the United States.
Japan, a longtime U.S. ally, has been subject to 24% tariffs on its exports to the United States, though those, like most of Trump’s sweeping “reciprocal” tariffs, have been suspended for 90 days.
But a general 10% tax will remain in place, as will a 25% tariff on cars, which will hit Japan particularly hard. The United States is Japan’s largest export destination, with cars accounting for about 28% of its exports to the United States.
Related topics:
