【Text/Observer Network Zhou Yibo】
According to Reuters, on July 12, local time, US Treasury Secretary Janet Yellen and Japanese Finance Minister Shunichi Suzuki met in Tokyo, and the two sides reached an agreement on deepening bilateral relations and jointly responding to the rising food and energy prices caused by the Russian-Ukrainian conflict.
The two also said that the Conflict between Russia and Ukraine, which exacerbated exchange rate fluctuations and could adversely affect economic and financial stability, would "cooperate appropriately" on exchange rate issues to fulfill commitments to the Group of Seven (G7) and the Group of Twenty (G20).
In addition, the two also denounced Russia, claiming that it would increase Russia's "war costs" through economic sanctions. The joint statement also referred to the U.S. proposal to "put a price cap on Russian oil," but did not reach any specific agreement on the proposal.
Screenshot of the Reuters report
The G20 Finance Ministers' Meeting will be held in Indonesia on July 15-16, and before attending the meeting, Yellen chose to visit Japan first and meet with Shunichi Suzuki in Tokyo on the 12th.
Yellen and Shunichi Suzuki reportedly said in a joint statement after the meeting: "We will continue to consult closely in the field of the foreign exchange market and cooperate appropriately on exchange rate issues to comply with our commitments at the G7 and G20." ”
The two also said they condemned Russia for waging a "war" against Ukraine and would continue to increase Russia's "war costs" through the imposition of economic and financial sanctions in the future. In addition, the joint statement also referred to the U.S. proposal to "set a price cap on Russian oil," which aims to prevent Russia from providing military support for the Russian-Ukrainian conflict through high oil prices.
However, the two did not reach any specific agreement on the proposal in this statement.
"We welcome the G7's continued exploration of ways to curb energy price increases, including the feasibility of setting price caps where appropriate, while considering mitigation mechanisms to ensure access to energy markets for countries most vulnerable to injury and shocks."
A senior Treasury official said earlier that if the proposal to "put a price cap on Russian oil" is not adopted, global oil prices could soar 40 percent to around $140 a barrel.
The senior official said the proposed "price cap" would ideally be set above the marginal cost of Russian oil production, so that Russia would have an incentive to continue exporting oil, but the benefits would not be enough to support military spending in the Russian-Ukrainian conflict.
On July 12, local time, Yellen (right) met with Shunichi Suzuki in Tokyo Image source: Visual China
According to the Observer Network, the Helsinki-based research institute "Energy and Clean Air Research Center" (CREA) released a report in June that in the first 100 days of the Russian-Ukrainian conflict, Russia earned 93 billion euros in revenue through fossil fuel exports, of which 61% was imported by the European Union, and the largest importer was China (12.6 billion euros).
The report analysis said that as some countries and companies no longer trade energy with Russia, the country's fossil fuel exports in May fell slightly from about 15% compared with before the outbreak of the Russian-Ukrainian conflict.
However, the surge in energy prices has instead made the average price of Russian fossil fuel exports about 60% higher than last year, even considering the "discount price" of Russian crude oil prices 30% lower than international market prices.
Comparison of imports of fossil fuels from Russia Source: CREA
Reuters reported that just earlier in the day on the 12th, Suzuki Shunichi issued a new warning that the yen was weakening again. On the 11th, the yen hit a 24-year low against the dollar, falling below the 137 yen mark against the 1 dollar.
"We face a wide variety of global issues, and we hope to make the most of today's meeting [with Yellen] to solve them by deepening our cooperation." Shunichi Suzuki said, "In recent foreign exchange market transactions, I can see a sharp depreciation of the yen, and I am worried about this. ”
"The (Japanese) government will pay closer attention to the foreign exchange market while maintaining contact with the Bank of Japan."
According to a previous report by the Asahi Shimbun, Japan has recently maintained a loose monetary policy, which has led to further widening the interest rate differential between The Japanese and US currencies. Since March this year, the yen has depreciated by about 20 yen in about four months.
On the other hand, due to the recent rising energy prices, the prices of food and gasoline in Japan have also risen, further increasing the living burden of the Japanese people.
This article is an exclusive manuscript of the Observer Network and may not be reproduced without authorization.