Japan’s $550 billion US investment to have no FX impact, top trade negotiator says

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By Makiko Yamazaki

TOKYO (Reuters) -Japan will run a $550 billion U.S.-bound investment package agreed in Tokyo’s tariff deal with Washington without any impact on the foreign exchange market, its top trade negotiator Ryosei Akazawa said on Wednesday.

“Based on our calculation, $550 billion is within the range where there will be no foreign exchange impact,” Akazawa said, speaking to reporters at the Foreign Correspondents’ Club of Japan.

Japan and the United States signed a memorandum of understanding on the details of the package last month, which covers Japanese investments in sectors such as chips, metals, pharmaceuticals, energy and shipbuilding to be made by January 2029.

Concerns over foreign exchange implications have become a major issue in South Korea’s negotiations to formalise a U.S. tariff deal, which would reduce U.S. levies on Korean imports to 15% from 25% in return for South Korea’s investment of $350 billion in the U.S.

Akazawa said the government may use foreign exchange reserves for loans, for example by tapping a special account of the foreign exchange fund managed by the finance ministry.

Japan’s investment package would include equity, loans and loan guarantees from the state-owned agencies Japan Bank for International Cooperation (JBIC) and Nippon Export and Investment Insurance (NEXI).

When asked about a comment he made in July that the equity component would account for just about 1-2% of the $550 billion, Akazawa clarified that the percentage was based on the past investment track records for JBIC and NEXI.

He said it’s up to Japan to decide the actual ratio when it starts investing.

(Reporting by Makiko Yamazaki; Editing by Muralikumar Anantharaman & Shri Navaratnam)