Trump-Driven Strong Dollar... Japanese Finance Minister Says "Will Respond to Excessive Yen Weakness"

With Donald Trump winning the U.S. November 5 presidential election and a global strong dollar trend being confirmed, Japan's Finance Minister announced that they will respond to excessive yen depreciation movements.

According to Kyodo News and others, Japanese Finance Minister Kat? Katsunobu stated at a press conference after the Cabinet meeting that "there are unilateral and rapid movements" in the recent foreign exchange market and "appropriate responses will be taken against excessive movements." Regarding Trump’s election victory, he emphasized, "The United States is a major trading partner," and "it is necessary to closely monitor the impact on the Japanese economy through various channels."

The dollar-yen exchange rate, which had fallen to around 140 yen per dollar in September, jumped to 154 yen per dollar on the 6th when Trump secured his victory in the U.S. presidential election. This indicates that the yen’s value has depreciated accordingly. In the Tokyo foreign exchange market, the dollar-yen rate is moving around the 152 yen level in the afternoon of that day.

The market views that Trump’s campaign promises, such as large-scale tariffs, could not only fuel inflation but also make it difficult for the Federal Reserve (Fed) to further cut interest rates, leading to a stronger dollar and weaker yen. Additionally, the recent failure of the ruling Liberal Democratic Party to secure a majority in the Japanese House of Representatives election has prolonged political uncertainty, which is also considered a factor contributing to yen weakness.

However, some speculate that the global strong dollar trend following Trump’s election victory may be short-lived.