After Russia imposed an invasion on Ukraine in the latter days of February, the impact of the war was severe on most major economies—some who faced direct contact in the crossfire were the U.S. and Japan.
As a solution garnered on Tuesday for a little boost to their respective growths, Shunichi Suzuki, the Japanese Finance Minister had a pact with Janet Yellen who represented the U.S. as Treasury Secretary. They share the mutual goal of suppressing sky-high prices of food, energy, and other necessities, and also aim to stabilize the war-sensitive volatile markets trading currency.
The war had stirred commotion in exchange rates, which in turn reflected poorly on the economic growth and solid footing in finances. The two representatives assured to deal with the currency hurdles with measures “as appropriate” to their pledge and alliance.
After the meeting, a joint statement was issued pointing at the Group of Seven members (G7) and Group of 20 economies (G20), who was referenced in the shared speech as their commitments to Japan & the U.S. will be honoured with the two sides walking down the path of monitoring exchange markets and helping each other up, as well as keep the global economic health in mind as they work toward shared peace.
Tuesday saw Yellen admitting that the yen was indeed doing terrible on the charts. However, the U.S. stood strong on the rule that currency intervention is a road taken only during circumstances that warrant such a dire damage control method.
The yen gained a track record as one of the most unpromising performers in the market this year, losing about 16% against the dollar. It also laid low at a 24-year record above the 137 yen to the greenback on Monday.
The two parties share the same train of thought that Russia’s war against Ukraine was unreasonable, fuelled by hatred, and intolerable. They intend to counter the situation by tightening the sanctions; Russia has already suffered losses after being cut from the global financial market ecosystem since its first act of hostility, but these imposing sanctions might pressure them more in reprimand.
Several side effects of the Ukraine predicament include a global economic slowdown in the form of a recession—a strong price to pay after the supply chain disasters, high demands for oil and commodities, and rampaging interest rates.
A few other issues are also to be countered by Suzuki and Yellen, namely, tax reforms across the globe, climate change, and also the aim to persuade China and similar non-Paris club members to join hands to support countries struggling with debt issues.
Yellen shed more light on this matter, mentioning the fact about China evading the call for help from these struggling nations, and Beijing has been requested for assistance by Washington multiple times but to no avail.
Regardless, the U.S. is firm on its decision to do its part in this deal.
One such way it is aiding the cause, according to the joint statement, is by capping Russian oil rates to prevent Moscow from using its oil revenue to fund war expenses.
Yellen has stated that the U.S. hadn’t spoken of a fixed number for the price cap, but the past Russian price tag landed at $40 each barrel and their goal rate is “well below that”, which might knock some sense into Moscow’s crude sector.
On Suzuki’s side of things, he emphasized worries about Japan’s currency which was increasingly falling down the pit.
He underlined that G7 shared the sentiment that sudden volatility and unpredictable moves can puncture stability in the economic and financial scales. And that they will continue to observe the market with a hawk-eyed vision.
Scheduled on Wednesday is Yellen’s visit to Indonesia to greet Suzuki and the G20 monetary officials at meetings on July 15th and 16th.