Trump Criticizes Strong Dollar as Japan and South Korea Raise Currency Concerns

Former U.S. President Donald Trump has criticized the strong dollar's impact on U.S. exports and manufacturing, as Japan and South Korea express concerns over the sharp depreciation of the yen and won against the U.S. dollar. The dollar has surged to its highest level since November against other major currencies, driven by a strong U.S. economy, sticky inflation, and geopolitical tensions. This has caused unease among policymakers globally.

Japanese Finance Minister Shunichi Suzuki stated that the environment for an appropriate response to the weak yen is now in place, following a recent series of international meetings in Washington, including a gathering of finance ministers from Japan, the United States, and South Korea. The three countries have agreed to continue closely consulting on foreign exchange market developments while acknowledging the serious concerns of Japan and South Korea about the recent sharp depreciation of their currencies.

Suzuki said the Japanese government is monitoring foreign exchange movements with "a high sense of urgency" and will take appropriate action to counter excessive volatility in the currency market without ruling out any options. The yen has continued to weaken even after the Bank of Japan raised interest rates, and the finance chiefs of Japan, South Korea, and the U.S. have shared "serious concerns" about the sharp depreciation of the yen and won.

Why this matters: The strong dollar is causing pain across Asia, with currencies like the Indian rupee, Vietnamese dong, and Indonesian rupiah reaching record lows or multi-year lows. It is also raising concerns about imported inflation in the Eurozone and the impact on struggling exporters in Switzerland. The currency volatility has global implications for trade, inflation, and economic growth.

The Group of Seven finance ministers and central bank governors have also reiterated that excessive and disorderly foreign exchange movements negatively affect the economy. Suzuki stressed the need for close communication with monetary authorities in other countries, signaling the government is laying the ground for another market intervention. Japan has warned that it might start buying yen to support its value, as the gap between Japanese and U.S. interest rates remains wide.

Key Takeaways

• Trump criticizes strong dollar's impact on U.S. exports and manufacturing.
• Japan and South Korea express concerns over sharp depreciation of yen and won.
• Japan, U.S., and South Korea to closely consult on foreign exchange market developments.
• Strong dollar causing pain across Asia, raising concerns about imported inflation in Eurozone.
• G7 reiterates need to address excessive and disorderly foreign exchange movements.