The US had not spoken to Japan about including currency provisions in the trade deal that two-sides are working on, Japanese Finance Minister Taro Aso said on Tuesday after the US raised currency issue on IMF annual meeting.
"The US side has not brought up the issue of currencies since we agreed in February last year that these matters would be discussed between Mnuchin and myself," Reuters quoted Aso as saying on Tuesday.
"Our basic position is talks with the US Trade Representative don't include currencies," he said.
US Treasury Secretary Steven Mnuchin said on Saturday at the IMF annual meeting that the Washington is seeking to include a provision to deter currency manipulation in future trade deals, including the one with Japan.
Mnuchin's remarks raised concerns on a possible dispute about yen's valuation and soon made story headlines in Japanese media.
An anonymous Japanese government official expressed concern that such a provision will hinder the Bank of Japan's ability to conduct monetary easing measures, Japan Times reported on Saturday.
Like automobile tariffs, the currency ground rules is "a nonstarter" for Japan's trade negotiations with the US, Nikkei Asian Review reported on Tuesday.
To get rid of years of deflation and slow economic growth, Japan started an ultra-easy monetary stimulus in 2013, leading to a sharp depreciation of the yen, which benefits its exporters.
With the new clause on currency planned by the US, "it will be harder for the yen to continue weakening against the dollar, which sapped expectations that companies would beat earnings forecasts," Takeshi Kamoshita of Asset Management One, was quoted by Nikkei.
The US has put Japan, China, India and others on a monitoring list for currency policies, according to a Treasury report on US major trading partners in April. The latest version of the report is expected to be launched this week.
If Japan is labeled currency manipulator, fears of narrowing monetary policy options will spread through Japan's markets, Ryota Sakagami, chief Japan equity strategist at J.P. Morgan in Tokyo, was quoted by Nikkei.
(With inputs from Reuters)