Japan ready to respond to disorderly movements in FX market, Katayama says

Japanese authorities are prepared to respond if currency market movements become disorderly, Finance Minister Satsuki Katayama said one day before the U.S. holds its midterm elections, and act in accordance with a standing pact with her U.S. counterpart.

“If there are disorderly movements or excessively speculative moves, we will take action,” Katayama told reporters Monday. “We have also been coordinating and holding discussions with the U.S. quite frequently, and I expect we will continue to respond in that way,” she said.

Katayama was speaking ahead of the U.S. elections Tuesday that will determine leadership of both chambers of Congress, with polls and prediction markets pointing to a likely Democratic takeover of the House of Representatives.

Control of the Senate remains less certain.

A Democratic sweep of Congress could constrain U.S. President Donald Trump’s fiscal agenda, potentially pushing down U.S. Treasury yields and the dollar while supporting the yen.

“But the president and his Cabinet members won’t change immediately. My counterpart will probably stay the same as well,” Katayama said. “We have issued a joint statement, and we will continue to act in line with it. That applies even at this very moment.”

Asian equities, particularly artificial intelligence-related stocks, could also come under pressure if Democrats tighten scrutiny of AI investment, data-center development and energy costs. That could weigh on semiconductor companies in Japan, South Korea and Taiwan amid growing concerns over the sustainability of the AI boom.

Geopolitical risks could further complicate the market reaction. A Republican defeat could prompt Trump to rely more heavily on executive powers, potentially taking a tougher stance on tariffs, Iran and Ukraine. Renewed tensions with Iran could drive up oil prices, weighing on Japanese equities and the broader economy.

The U.S. president has hinted at stepping up U.S. attacks against Iran after the election, though U.S. Secretary of State Marco Rubio said Saturday that no decision had been made on fresh strikes and that Trump prefers a diplomatic resolution.

Katayama reiterated that concerns over the yen’s weakness were shared between Trump and Prime Minister Sanae Takaichi, citing their communication at a leader’s summit in September. Katayama added market conditions had improved compared with when the yen slid past ¥160 per dollar, while refraining from commenting on specific levels.

The yen was trading around ¥157.84 per dollar Monday morning in Tokyo.

“What matters is firmly preventing excessive volatility, speculative moves and disorderly market movements,” Katayama said. “I believe both authorities remain absolutely committed to that in pursuit of our respective policy objectives.”