The dollar was expected to open higher against the yen in Tokyo last week after President Trump said that smartphones and semiconductor-related items would be exempt from reciprocal tariffs. However, Commerce Secretary Ratnick said that smartphones and other products would be handled under the newly established semiconductor tariffs, and dollar/yen tested the ¥142 level again due to pessimism that the tariffs would be inescapable.
However, the semiconductor tariffs will not be as high as the reciprocal tariffs. It should be a fairly low and realistic number. If so, pessimism about U.S. stocks may be about to end.

The U.S.-Japan tariff negotiations were held with President Trump also in attendance, with Economic Revitalization Minister Akazawa saying that “foreign exchange was not on the agenda,” causing the dollar to surge more than 1 yen from around 141.61 yen. Currency exchange will be discussed by Finance Minister Kato and Treasury Secretary Bessent, but perhaps currency exchange is not a priority this time around. This adjustment is likely because expectations were raised too high beforehand. However, the recent depreciation of the dollar is likely to continue as a trend, and we believe that there will be a lull in the near term, rather than a sudden plunge into the 130-yen level.

On the other hand, the recent debacle has put a question mark over confidence in the dollar. The trend of dollar selling is likely to continue. Nevertheless, there is no reason for concern as there was last week. If that is the case, the market will probably hover at the current level for a while. We would like to take the stance of carefully selling the return of the dollar. On the other hand, stock prices have been moving in a way that suggests that the bottom is near.

The IMF meeting between Finance Minister Kato and Treasury Secretary Bessento is scheduled to continue the tariff negotiations between Japan and the U.S. The next focus is likely to be the IMF meeting. That is likely to be the next focus. President Trump has made his intention to fire Powell clear by stating, “It’s never too soon to fire Chairman Powell. If the U.S. becomes a country where the central bank governor is fired at the will of the president, as is the case in Turkey, it will be very difficult to find a way to stop the depreciation of the currency.