Finance Minister Katsunobu Kato said the country won’t use the sale of its U.S. Treasury holdings in trade talks with Washington, clarifying his previous remarks that suggested they could be used as a negotiating tool.
"We are not considering the sale of U.S. Treasurys as a means of Japan-U.S. negotiations,” Kato said in Milan on Sunday, where he was attending the annual meeting of the Asian Development Bank.
Kato’s latest comments came after he was asked to clarify remarks he made on Friday, when he said Japan’s U.S. Treasury holdings could serve as a negotiation tool in trade talks with Washington.
"It does exist as a card,” Kato said at the time, adding "whether or not we use that card is a different decision.”
Japan held roughly $1.13 trillion in Treasury Securities at the end of February — making it the biggest overseas holder of U.S. debt — followed by China with $784 billion, according to the U.S. Treasury. Japan holds Treasurys as part of a special account that can be used to fund currency intervention.
Japan manages assets denominated in foreign currencies in the special account "to ensure sufficient liquidity to prepare for necessary foreign exchange transactions so that we can achieve the stability of our national currency,” Kato said on Sunday. "We will continue to manage them appropriately in accordance with this policy.”
Japan is in the midst of high-stakes trade negotiations with U.S. President Donald Trump's administration, including over the key issue of tariffs on car exports. Tokyo’s chief trade negotiator, Ryosei Akazawa, expressed hopes of reaching a trade agreement with the U.S. in June, following the latest round of the negotiations in Washington last week.
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