Japan, US blame Russia war in Ukraine for exchange rate volatility

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Japanese Finance Minister Shunichi Suzuki and US Treasury Secretary Janet Yellen condemned Russia’s invasion of Ukraine, saying Tuesday that the war has raised exchange rate volatility.

Suzuki and Yellen reaffirmed they would ratchet up pressure on Moscow to deny funds for Russia’s military through measures including price caps on oil prices in line with the Group of Seven nations’ commitment.

Japanese Finance Minister Shunichi Suzuki (L) and US Treasury Secretary Janet Yellen shake hands during a meeting at the Finance Ministry in Tokyo on July 12, 2022. (Kyodo) ==Kyodo

The meeting comes as the yen’s rapid fall has increased the cost of living in Japan, which is largely dependent on foreign countries for energy resources and food.

The currency’s depreciation has mainly stemmed from a widening interest rate gap between Japan and the United States, where the Federal Reserve remains aggressive in its fight to tame historic levels of inflation.

The idea of ​​capping Russian oil prices was brought up at a recent summit meeting of the Group of Seven nations, as such a measure could put downward pressure on global energy prices.

The G-7 groups Britain, Canada, France, Germany, Italy, Japan and the United States plus the European Union.

The Treasury Department is planning to hold talks with major importers of Russian oil, such as India, in the following weeks to create a highly effective capping structure.

The G-7 and other like-minded countries have imposed sanctions on Russia in the wake of its military aggression in Ukraine in violation of international law.

In a roundtable session later Tuesday, Yellen and Japanese business leaders are expected to discuss ways to bolster supply chain resiliency and address bottlenecks that are driving up prices for consumers.

Yellen is visiting Japan before traveling to the Indonesian island of Bali, where she and Suzuki will attend a two-day meeting of finance ministers and central bank governors from the Group of 20 major economies from Friday.

Suzuki and Yellen previously met in Washington in April, when they agreed to closely monitor currency movements amid the yen’s rapid depreciation against the US dollar.

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