US President Donald Trump said Monday that he has urged the leaders of Japan and China to stop weakening their currencies, arguing that such actions create an unfair economic advantage over the United States.
“I’ve called President Xi, I’ve called the leaders of Japan to say you can’t continue to reduce and break down your currency,” Trump stated at the White House. “It’s very hard for us to make tractors, Caterpillar here, when Japan, China, and other places are killing their currency, meaning driving it down.”
Following Trump’s remarks, Japanese Finance Minister Katsunobu Kato denied that Tokyo is intentionally devaluing the yen. He stated that Japan has maintained its “basic stance on currency policy” in coordination with the Group of Seven (G7) nations and the United States, including discussions with US Treasury Secretary Scott Bessent.
Japanese Economy Minister Ryosei Akazawa further clarified that Japan intervenes in currency markets only when movements appear speculative rather than as a strategy to weaken the yen.
On the Chinese side, analysts suggest that Trump’s comments may influence China’s approach to its currency policy. While some had speculated that China might allow the yuan to depreciate in response to economic challenges and US tariffs, the People’s Bank of China (PBOC) has so far resisted such moves. The central bank has been working to stabilize the yuan by setting a controlled daily reference rate and limiting fluctuations.
Despite ongoing economic pressures, the PBOC has held back on interest rate cuts and has taken measures to prevent capital outflows. Some analysts believe that China will continue to maintain stability in the yuan, particularly in light of Trump’s warning.
“There is a risk that China will eventually allow the yuan to adjust in response to significant tariffs, but for now, the PBOC appears committed to a steady policy,” said Ken Cheung, chief Asia FX strategist at Mizuho Bank.
Market observers are closely watching upcoming discussions at China’s National People’s Congress, where the country’s economic growth targets and monetary policies could influence the future direction of the yuan.
While Trump’s concerns center on potential currency manipulation, many economists argue that broader market forces—such as the strength of the US dollar, global inflation, and monetary policy decisions—play a significant role in currency fluctuations.
China’s yuan has weakened by about 2.5% against the US dollar since Trump’s election victory, a move largely attributed to the dollar’s strength rather than direct intervention by Beijing. Similarly, Japan’s yen has faced depreciation due to global economic conditions rather than deliberate policy actions.
With input from Reuters, Bloomberg, and US News & World Report.
