US Secretary Scott Bessent and Japanese Finance Minister Katsunobu Kato did not discuss foreign exchange levels during a meeting in Canada, according to a statement from the Treasury Department. The news sent the yen lower.

Bessent and Kato “reaffirmed their shared belief that exchange rates should be market determined and that, at present, the dollar-yen exchange rate reflects fundamentals,” the department said Wednesday.

The officials met on the sidelines of a meeting of finance ministers and central bank governors from the Group of Seven nations being held in Banff, Canada.

Bessent and Kato discussed issues relevant to the US-Japanese economic relationship, including global security and the ongoing bilateral trade discussions between the two nations, the department said.

The yen weakened as much as 0.5% to ¥144.40 against the dollar after the news. Japan’s currency was the worst performer among its Group of 10 peers against the dollar on Thursday morning in Tokyo.

Still, the reaffirmation on the currency helps Kato lower the risk of a rapid weakening of the yen after his ministry has struggled to clearly reverse course in the last few years.

The outcome of the meeting suggests the US has no major issue with the yen’s appreciation after President Donald Trump accused of Japan taking an unfair advantage by lowering the value of the currency.

Any rapid movement in the strength of the yen could increase the chance of a recession, regardless of direction, especially as Japan and the US continue negotiations on a trade agreement.

A much weaker yen would fuel inflationary pressures while a stronger currency would squeeze corporate profits and wage momentum as trade concerns are already hurting consumer sentiment. Japan’s economy contracted in the first quarter.

This was the pair’s second face-to-face talk in a month after the two met in April.

With assistance from Mia Glass.

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