Japan's Finance Minister Satsuki Katayama stated that the weak yen remains an ongoing concern, and Japan and the United States will continue to maintain close contact in seeking to keep foreign exchange markets running in an orderly manner, according to a report from Zhitong Finance APP.

Katayama said on Tuesday: "As Prime Minister Sanae Takaichi said during the recent Japan-US summit in New York, I believe that, generally speaking, the undervaluation of the yen is a problem. We will continue to maintain close communication between Japanese and US financial authorities and work to maintain orderly operations in the foreign exchange market."

Katayama made these remarks after a phone call with US Treasury Secretary Scott Bessent late last Friday. During the call, the two officials reaffirmed their shared concern about the yen's undervaluation and agreed to further strengthen cooperation.

Katayama said she told Bessent during the call that Japanese Prime Minister Sanae Takaichi is not a reflationist. This statement was clearly intended to reassure Bessent that the Japanese Prime Minister is not seeking unconstrained expansionary policies.

Even after the Bank of Japan raised its policy rate earlier this month to the highest level in 31 years, the yen's weakness has persisted. The BOJ's subsequent policy signals, combined with rising market bets on further Federal Reserve rate hikes, fueled speculation that the interest rate differential between Japan and the US could widen, once again putting pressure on the yen.

Japanese authorities have intervened in the foreign exchange market multiple times this year to support the yen — the first intervention during the spring Golden Week holiday and again in summer — pushing Japan's foreign exchange intervention spending to a record high this year. In July, Japan also conducted its first joint yen-buying intervention with the United States in 28 years.

Katayama's latest remarks indicate that Japanese authorities remain vigilant against the risk of another yen decline. Japan's top currency official, Atsushi Mimura, said on Monday that the market should take seriously the "very clear" message on the yen that Tokyo and Washington sent last week.

Speaking about the recent yen depreciation in an interview, Mimura said: "The Japanese Prime Minister, the Finance Minister, and the US side have sent a very clear message. The market should take this message at face value." He also said: "I will closely watch whether the market will continue to take this message seriously."

Strategists believe that given the yen's continued depreciation after the Bank of Japan's September 18 policy meeting, 160 yen per dollar has once again become the level that tests Japan's tolerance for yen weakness. However, the growing threat of intervention itself may help curb the yen's decline.

But whether intervention can bring about a lasting reversal may largely depend on whether the United States participates, because historically, when monetary policy fundamentals remain unfavorable, Japan's unilateral operations have often struggled to produce sustained impact.

Regarding the issue of rising government bond yields, Katayama said she will maintain close communication with market participants while monitoring relevant developments with a high sense of urgency. Japan's benchmark 10-year government bond yield has been hovering around 3%, while global bond markets are currently experiencing a sell-off.

Katayama said that from a global perspective, the rise in Japanese government bond yields does not appear particularly significant. She mentioned her discussions last week with billionaire investor Stanley Druckenmiller and JPMorgan Chase CEO Jamie Dimon.

Katayama said both individuals pointed out that global inflationary pressures are rising, including pressures from higher oil prices and other commodity prices, while government spending is also trending upward as countries respond to these pressures.

Katayama said the two also noted that hyperscalers — companies that operate computing services at extremely large scale — are raising substantial funds in the corporate bond market. Katayama said that traditionally people believed government borrowing would crowd out private sector financing, but this situation may increasingly be reversing, with large-scale corporate bond issuance putting upward pressure on government bond yields.

Katayama said: "They told me that compared to this, the rise in Japanese yields is not particularly large. They view the situation calmly, believing that ultimately yields have risen in Japan, the United States, and Europe, and I share this more measured view."