US and Japan agree to tackle currency and economic impact of war in Ukraine

US Treasury Secretary Janet Yellen and Japanese Finance Minister Shunichi Suzuki agreed on Tuesday to further strengthen bilateral relations and work together to address rising food and energy prices exacerbated by the Russian war in Ukraine.

They said the war had increased exchange rate volatility, which could have adverse consequences for economic and financial stability, and pledged to “appropriately cooperate” on monetary matters, in line with their commitments in within the framework of the Group of Seven (G7) and the Group of 20 economies.

“We will continue to consult closely on foreign exchange markets and cooperate as appropriate on monetary issues, in line with our G7 and G20 commitments,” the two sides said in a joint statement after their meeting. .

The two leaders also said they were united in their “strong condemnation of Russia’s unprovoked, unjustifiable and illegal war against Ukraine”, adding that they continued to increase the cost of its war for Russia. by implementing economic and financial sanctions.

Russia described the invasion of Ukraine as “a special military operation”.

Yellen and Suzuki also urged China and other non-Paris Club creditors to cooperate “constructively” to develop debt treatments for low-income countries facing debt overhang, while addressing issues such as changing climate change and global tax reforms.

Their joint statement also referred to a Russian oil price cap that the United States proposed to prevent Moscow from benefiting from the use of higher oil prices to finance its war in Ukraine, but did not reach a conclusion. concrete agreement on a program.

“We welcome the efforts of the G7 to continue to explore ways to curb rising energy prices, including the feasibility of price caps where appropriate, while considering mitigation mechanisms to ensure that countries most vulnerable and most affected retain access to energy markets,” the two leaders said in the statement. .

The global price of oil could climb 40% to around $140 a barrel if a Russian oil price cap proposal is not passed, along with sanctions waivers that would allow shipments below that price, said a senior US Treasury official earlier.

The US official said the aim was to set the price at a level that covers Russia’s marginal cost of production so that Moscow has an incentive to continue exporting oil, but not high enough to fund its own. war against Ukraine.

Japan’s finance minister fired yet another warning shot against fresh yen weakness earlier Tuesday, after the currency hit a new 24-year low above 137 yen to the dollar the day before.

“There are various global issues. We would like to make the most of today’s meeting to deepen our coordination to resolve them,” Suzuki told reporters.

“A sharp weakening of the yen is seen in recent trading in the foreign exchange market. I am concerned,” he said, “the government will monitor the foreign exchange market more closely while liaising with the Bank of Japan”.

Meanwhile, the US Treasury Secretary paid tribute to former Prime Minister Shinzo Abe, Japan’s longest-serving modern leader, at a private vigil on Monday evening, praising his work to increase Japan’s prosperity and advance the status of women.

She canceled a public speech at the Port of Yokohama out of respect for Abe’s death, but will still meet privately with Japanese business leaders to discuss how improving supply chain resilience and a greater use of “friends shoration” can help ease inflationary pressures and solve the problem. bottlenecks.

On Wednesday, Yellen will travel to Indonesia to meet with Suzuki and other Group of 20 finance officials for their July 15-16 meetings.