US Treasury Secretary: If the Bank of Japan continues to implement the correct policies, the yen exchange rate will stabilize.

According to reports from Japanese media, US Treasury Secretary Besent said that if the Bank of Japan continues to implement the correct monetary policy, the exchange rate of the Japanese yen will stabilize at a reasonable level. The report cited the content of a group interview, in which Besent refused to comment on the level of the Japanese currency exchange rate. This month, the decline in the yen against the US dollar was more than twice that of other major currencies, reaching an 8-month low of 153.27 yen to 1 US dollar on October 10. Speculation about the Bank of Japan raising interest rates in the short term has weakened recently, which is a key factor in this exchange rate change. According to reports, Besent refused to comment on the next policy decision of Bank of Japan Governor Haruhiko Kuroda on October 30. Besent only mentioned that Kuroda is very capable. Besent's remarks on the Bank of Japan this time are much milder than in August. At that time, he criticized the Bank of Japan for being slow to act on inflation issues. This comment once again highlights Washington's stance on currency issues, as US President Trump has occasionally accused Japan of devaluing its currency to enhance its competitive advantage in trade. The unstable political situation in Japan is a major reason why fewer economists believe the Bank of Japan will tighten monetary policy this month. As of Thursday, overnight swap market data shows that traders estimate a 15% probability of a rate hike in October, compared to around 70% at the end of last month. It now appears that Sanae Takaichi, who unexpectedly won the leadership election in the ruling Liberal Democratic Party earlier this month, is likely to obtain the necessary votes in parliament to become the next prime minister. Last week, the Komeito party withdrew from the ruling coalition, prompting Takaichi to increase efforts to secure support from other opposition parties. It is expected that a new prime minister will be elected by parliament next week. Former Bank of Japan Executive Director Kazuo Momma has stated that if the yen falls below 155 against the US dollar, there is a high possibility of an interest rate hike within two weeks. Moreover, the new government may accept this measure to avoid additional inflation pressure due to the continued discontent of the population with rising living costs. Earlier on Thursday, the exchange rate of the yen against the US dollar was around 150.60. During an interview in Washington, Japanese Finance Minister and head of currency intervention Katon Katsunobu stated that he observed rapid fluctuations in the yen exchange rate towards depreciation. Japan's consumer price index has been at or above 2% for over three years, while real wages have continued to decline during the same period. In an interview in August, Besent stated that the Bank of Japan will raise interest rates in the future to address its inflation issues.