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Japan unlikely to face US pressure to strengthen yen, ex-top FX diplomat says
Published by Global Banking & Finance Review®
Posted on July 10, 2025
3 min readLast updated: January 23, 2026
Global Banking & Finance Review®
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Published by Global Banking & Finance Review®
Posted on July 10, 2025
3 min readLast updated: January 23, 2026
Japan is unlikely to face US pressure to strengthen the yen, despite trade surplus concerns, according to former diplomat Masatsugu Asakawa.
By Leika Kihara and Takaya Yamaguchi
TOKYO (Reuters) -Japan is unlikely to face pressure from the United States to intentionally strengthen the yen despite President Donald Trump's criticism of its large trade surplus with the U.S., former top currency diplomat Masatsugu Asakawa told Reuters.
Trump's focus on addressing the U.S. trade deficit and his remarks about Japan maintaining a weak yen have fuelled speculation about potential pressure on Tokyo to adjust the yen's value against the dollar and give U.S. manufacturers a competitive advantage.
Asakawa said the dollar's status as a global reserve currency remains solid; however, it has become more susceptible to selling pressure following Trump's April 2 announcement of sweeping "reciprocal" tariffs.
"If the dollar weakens, that accelerates U.S. inflation, a risk (U.S. Treasury Secretary Scott) Bessent is probably well aware of," he said in an interview late on Wednesday.
"My understanding is that there is no specific discussion on currency matters between Bessent and (Japanese Finance Minister Katsunobu) Kato in the context of trade talks," Asakawa said.
Asked about the likelihood of a coordinated dollar depreciation akin to the 1985 Plaza Accord in which Washington led the G7 advanced nations to weaken the U.S. currency, he dismissed the possibility.
"A second Plaza Accord is unlikely," he said, citing the need for agreement from China and Europe. Asakawa retains close contact with incumbent policymakers.
As vice finance minister for international affairs from 2015 to 2019, Asakawa was deeply involved in Japan's trade and currency negotiations with the U.S. during Trump's first term as president from 2017.
During Trump's first term as president, then Japanese Prime Minister Shinzo Abe successfully persuaded the U.S. president to leave exchange-rate matters in the hands of their finance chiefs, Asakawa said.
"Since then, the notion that currency matters should be left to the finance leaders appears embedded within the U.S. administration," he said.
In their first face-to-face talks in April, Kato said he agreed with Bessent to continue "constructive" dialogue on currency policy, but did not discuss setting currency targets or a framework to control yen moves.
The dollar index, which reflects its performance against a basket of six other currencies, has had its worst first half of the year since 1973, declining some 11%. So far this year, the dollar has fallen 7.5% against the yen.
Asakawa said the outcome of bilateral trade negotiations was hard to predict, with Trump showing little sign of heeding Tokyo's efforts to gain concessions on automobile tariffs.
Trump ramped up his trade war on Monday, telling 14 nations that they now face sharply higher tariffs from a new deadline of August 1. Japan would see tariffs go up to 25% from 10%, unless it can negotiate a deal with Washington.
Japan has several cards it can use in trade talks with Washington such as pledging to boost investment in the U.S., reviewing domestic car safety standards and contributing to liquefied natural gas (LNG) projects in Alaska, Asakawa said.
"Instead of presenting them incrementally, it's better to deliver them as a single package," he said.
After heading the Asian Development Bank until February, Asakawa is currently president of the Tokyo-based Institute for International Monetary Affairs.
(Reporting by Leika Kihara and Takaya Yamaguchi; Editing by Jacqueline Wong)
Japan is unlikely to face pressure from the United States to intentionally strengthen the yen, according to former top FX diplomat Asakawa.
Trump criticized Japan for its large trade surplus with the U.S. and suggested that Japan maintains a weak yen.
Asakawa dismissed the possibility of a second Plaza Accord, citing the need for agreement from China and Europe.
In their first face-to-face talks, Kato and Bessent agreed to continue 'constructive' dialogue on currency policy, but did not discuss setting currency targets.
The dollar index has had its worst first half of the year since 1973, declining approximately 11%.
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