On March 4, 2025, market sentiment swung as former President Donald Trump openly criticized the weak yen during remarks at various events, igniting discussions over currency manipulation practices by Japan and China. Trump stated, “You can’t do this because it’s unfair to us. We’re having such trouble making tractors, like Caterpillar, when Japan, China, and others are killing their currencies, which means they’re pushing it down.” He suggested imposing tariffs as compensation for the disadvantages faced by U.S. manufacturers.
This accusation came at a time when Japan's Nikkei average witnessed significant fluctuations, dropping more than 1% following Trump’s comments. The yen temporarily strengthened to 149.11 JPY/USD, marking its highest value since February 28. Trump's remarks sent ripples through the financial markets, demonstrating the fragile balance of the Japanese economy, which is heavily reliant on exports.
Japanese Finance Minister Katsunobu Kato responded to Trump’s allegations, asserting, “Japan does not implement policies aimed at directly weakening the yen.” Kato emphasized Japan's established position on monetary policy, reaffirmed with G7 counterparts and during discussions with U.S. Treasury Secretary Scott Bessent on January 29, 2025, stating this at a press conference held on March 4. He noted the Japanese government only intervenes indirectly when yen movements are deemed speculative.
Comments from Japanese Economy Minister Ryosei Akazawa echoed this sentiment, as he remarked the government intervenes solely during significant speculative movements to stabilize the currency. These statements reflect Japan's cautious approach toward maintaining economic stability without provoking international tensions.
Despite Trump's assertions, Prime Minister Shigeru Ishiba agreed with the sentiment of allowing finance ministers to manage exchange rate issues rather than exerting direct governmental control. “We’ll allow the finance ministers to handle exchange rates going forward,” said Ishiba last month, reinforcing the government's commitment to maintaining cooperative fiscal relations with the United States.
Meanwhile, the top currency diplomat of Japan, Atsushi Mimura, noted the managing position of the yen reflects Japan's strong economic fundamentals, citing expectations for the Bank of Japan (BOJ) to raise interest rates imminently. The BOJ concludes a decade of large-scale stimulus measures and aims to navigate beyond chronic deflation and economic stagnation.
Indeed, inflation has surpassed the central bank's target of 2% for nearly three years, prompting the BOJ to contemplate additional rate hikes following the modest increase to 0.5% announced in January. A survey conducted by Reuters indicates many economists expect the BOJ to incrementally raise interest rates again this year, likely by mid-to-late 2025, targeting 0.75%.
On the same day, the yen’s exchange rate fluctuated across local banks in Vietnam as well. Vietcombank's buying and selling rates registered at 165.8 VND/JPY and 176.33 VND/JPY respectively, showing increases of 1.96 and 2.07 VND. VietinBank offered slightly higher buying and selling rates of 168.06 VND/JPY and 176.06 VND/JPY, also increasing by 1.55 VND.
BIDV showed similar trends with buying rates of 168.11 VND/JPY, marking up by 1.56 VND, and selling at 175.92 VND/JPY, scaling up by 1.62 VND. Agribank followed suit, adjusting to buying and selling rates of 167.57 VND/JPY and 175.6 VND/JPY, each surging by 1.91 VND and 2.05 VND respectively.
NCB’s rates increased by 1.85 VND and 1.84 VND at 167.17 VND/JPY (buying) and 176.25 VND/JPY (selling). Eximbank continued the trend with buying and selling rates at 168.51 VND/JPY and 174.39 VND/JPY, both rates reflecting surges as well.
Even Techcombank charted growth with buying rates at 164.74 VND/JPY, which increased by 1.56 VND, and selling rates at 177.24 VND/JPY, rising by 1.53 VND. Sacombank noted the highest reported buying rate at 168.86 VND/JPY, inflATING by 2.25 VND and selling rates at 175.88 VND/JPY, marking up by 2.26 VND.
HSBC's rates also reflected this upward movement with buying rates at 167.9 VND/JPY, which rose by 2.46 VND, and selling rates at 175.3 VND/JPY, increasing by 2.56 VND. This positions HSBC within the range of 164.74 to 168.86 VND/JPY for buying and from 174.39 to 177.24 VND/JPY for selling across different surveyed banks.
A noteworthy aspect is the black market rates, also climbing. Currently, the buying and selling rates hold at 170.73 VND/JPY and 172.11 VND/JPY respectively, marking increases of 0.78 VND and 1.61 VND.
The contrasting perspectives from Trump and Japanese officials highlight the complexity of managing currency value concerns and the delicate relations bound by economic ties. With Trump’s tariffs looming and Japan’s strategic positioning, both countries must navigate their priorities cautiously to stabilize their economies and maintain cooperative investments. The outcome will undoubtedly affect not just the involved parties but the broader global economic environment.