As global financial markets breathe a temporary sigh of relief following a truce in the U.S.-China tariff battle, Japan is turning its attention to the next round of high-stakes diplomacy: foreign exchange talks with the United States. Japanese Finance Minister Katsunobu Kato announced on Tuesday that he is actively seeking a meeting with U.S. Treasury Secretary Scott Bessent on the sidelines of the G7 finance ministers' summit, which will take place in Canada from May 20 to 22.

“I’m making preparations to attend the G7 meetings next week,” Kato said during his regular press briefing. “If circumstances allow, I’d like to use this opportunity to have a meeting with Treasury Secretary Scott Bessent and continue to discuss foreign exchange.”

This potential meeting comes at a critical time for the global economy and Japan's own economic posture. The value of the Japanese yen has been under increased scrutiny, especially after a significant dip against the U.S. dollar. On Monday, the dollar climbed to 148.64 yen, its highest level since early April. The move was largely driven by investor optimism following the U.S.-China agreement to ease mutual tariffs, a shift that reduced immediate fears of a trade war and spurred a global “risk-on” rally. Safe-haven currencies like the yen naturally took a hit.

While Kato refrained from commenting directly on currency movements, he acknowledged the importance of staying alert. “The government will closely monitor related developments, examine the impact thoroughly, and act appropriately,” he stated when asked about the U.S.-China deal.

Foreign Exchange on the Sidelines, but Not Forgotten

Although Japan and the United States have previously agreed to keep currency matters out of direct trade negotiations, the issue is far from dormant. Discussions around foreign exchange—particularly the strength of the yen—have become increasingly sensitive as President Donald Trump continues to express concerns over trade imbalances and Japan’s currency practices. His past criticisms of Japan’s “weak yen policy” have raised fears in Tokyo that pressure may mount to let the yen strengthen, a move that could potentially hurt Japan’s exporters.

During their last meeting on April 24 in Washington, Kato and Bessent agreed to maintain what they called a “constructive” dialogue on currency policy. However, they stopped short of discussing hard targets or a formal framework to manage yen movements.

Kato emphasized on Tuesday that if a meeting does occur in Canada, foreign exchange would be part of the broader conversation—especially within the context of ongoing tariff discussions between Japan and the U.S. “If the meeting with Secretary Bessent goes ahead, naturally, foreign exchange could come up,” he noted.

Global Eyes on the Yen

Japan’s cautious diplomatic approach reflects a broader concern: keeping markets stable while defending its own economic interests. With the U.S. dollar gaining momentum and investors shifting away from safe-haven assets, the yen’s recent weakening is drawing attention not just from policymakers but also from international investors.

As the G7 finance ministers and central bank governors gather in Canada next week, the currency chessboard will be closely watched—especially as Japan seeks to balance strategic diplomacy with market realities. Whether Kato and Bessent sit down for that much-anticipated side meeting could set the tone for future negotiations between two of the world’s biggest economies.

For now, all eyes are on Canada—and the quiet but significant conversations that may happen in the corridors of the G7.