TOKYO, July 12 (Reuters) – U.S. Treasury Secretary Janet Yellen and Japanese Finance Minister Shunichi Suzuki agreed on Tuesday to work together to tackle rising food and energy prices, as well as the volatility of the foreign exchange markets, exacerbated by the Russian war in Ukraine.

They said the war had increased exchange rate volatility, which could have negative consequences for economic and financial stability, and pledged to cooperate “where appropriate” on monetary issues.

“We will continue to consult closely on foreign exchange markets and cooperate as appropriate on monetary issues, in line with our G7 and G20 commitments,” the two sides said in a joint statement after the meeting, referring to the Group of Seven and the Group of 20. economies.

Later Tuesday, Yellen acknowledged the substantial depreciation of the yen in recent weeks, but said the US view remained that monetary intervention was only warranted in “rare and exceptional circumstances.”

The Japanese currency, which hit a new 24-year low above 137 yen to the dollar on Monday, is down around 16% against the greenback this year.

The two leaders also said they were united in their “strong condemnation of Russia’s unprovoked, unjustifiable and illegal war against Ukraine”, adding that they continued to increase the cost of its war for Russia. by imposing economic and financial sanctions.

Russia described the invasion of Ukraine as “a special military operation”.

The Ukraine crisis has heightened the risk of a global recession by stoking a surge in cost pressures and exacerbating supply chain disruptions in a blow to demand.

Yellen and Suzuki also urged China and other non-Paris Club creditors to cooperate “constructively” to help low-income countries facing debt distress, while addressing issues such as climate change and tax reforms. world.

China’s lack of cooperation on debt restructuring for low-income countries has been “quite frustrating” and Washington has discussed the issue with Beijing on several occasions, Yellen told reporters after the meeting.

RUSSIAN OIL PRICE CEILING

The joint statement also referred to a Russian oil price cap proposed by the United States to prevent Moscow from using higher oil prices to finance its war in Ukraine, but refrained from reaching an agreement on a plan.

Yellen told reporters that the United States had not mentioned a specific figure for the price cap, but that Russian budgets had in the past factored in $40 a barrel and their marginal cost was “well below that”.

“I’m not saying $40 is the right number,” she said. “We haven’t decided what the right number is.”

The global price of oil could climb 40% to around $140 a barrel if a Russian oil price cap proposal is not passed, along with sanctions waivers that would allow shipments below that price, said a senior US Treasury official earlier.

The US official said the aim was to set the price at a level covering Russia’s marginal cost of production so that Moscow would have an incentive to continue exporting oil, but not enough to allow it to finance its war against Ukraine. Read more

YEN’S MISFORTUNE

Japan’s finance minister, who issued yet another warning shot on Tuesday over renewed yen weakness, said he told Yellen that his government was concerned about the currency’s recent rapid weakening.

“As the G7 agrees, excessive volatility and disorderly moves can harm economic and financial stability, and we are watching the market carefully with a high sense of urgency,” Suzuki told reporters after the meeting.

Yellen said the two officials did not discuss any related intervention or policy.

She added that the United States believes that countries like itself, Japan and other G7 members should have market-determined exchange rates and that “only in rare and exceptional circumstances that intervention is warranted”. Read more

Yellen, who previously chaired the U.S. Reserve Bank, met separately with Bank of Japan Governor Haruhiko Kuroda on Tuesday, the Treasury said. Read more

She also met with prominent Japanese economists at the US Embassy in Tokyo to discuss monetary policy, inflation, fiscal policy and the economic outlook for the two countries. Read more

Yellen paid tribute to former Prime Minister Shinzo Abe, Japan’s oldest modern leader, at a private vigil Monday night, praising his work to increase Japan’s prosperity and advance the status of women.

On Wednesday, Yellen will travel to Indonesia to meet with Suzuki and other Group of 20 finance officials at rallies July 15-16.

Reporting by Andrea Shalal and Tetsushi Kajimoto; Written by Daniel Leussink; Editing by Shri Navaratnam and Clarence Fernandez

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