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TOKYO — U.S. Treasury Secretary Janet Yellen began a meeting on Tuesday with Japanese Finance Minister Shunichi Suzuki to discuss ways of further strengthening Western sanctions against Russia over its war in Ukraine.

The meeting will also focus on working with Japan and other trusted partners to build stronger and more resilient supply chains to help lower prices for consumers in the United States, where inflation is running at 40-year highs, the Treasury Department said.

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The two countries “will discuss how the United States and Japan can continue our united efforts to end Russia’s brutal war against Ukraine,” Yellen said at the start of the meeting.

“I look forward to building on that work with discussions today to follow up on the direction by the G7 Leaders to explore a price cap that will further deny (Russian President Vladimir) Putin revenue to fund his military,” she added.

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

A comprehensive agenda will also include currencies, a Japanese official said, as the yen hit a fresh 24-year low beyond 137 yen to the dollar on Monday, adding to concerns about the rising cost of living.

“Currencies will be discussed as one of various issues,” the official said speaking on condition of anonymity.

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Yellen will describe steps Washington is taking to address inflation, while sharing her view that the U.S. economy remains very strong, given the robustness of the U.S. labor market, the official said.

RUSSIAN OIL PRICE CAP

The two sides will discuss setting a price cap on Russian oil to limit Moscow’s profits and help lower energy prices.

They will likely affirm conformity to a price cap but stop short of reaching any concrete agreement on a scheme, the official said.

The global price of oil could surge by 40% to around $140 per barrel if a proposed price cap on Russian oil is not adopted, along with sanction exemptions that would allow shipments below that price, a senior U.S. Treasury official said earlier.

Yellen will discuss implementation of the U.S. price cap proposal and global economic developments with Suzuki. The goal was to set the price at a level that covered Russia’s marginal cost of production so Moscow is incentivized to continue exporting oil, but not high enough to allow it to fund its war against Ukraine, the Treasury official said.

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YEN WOES

The Japanese finance minister fired off a fresh warning shot against the renewed yen weakness earlier on Tuesday.

“There are various global problems. We’d like to make maximum use of today’s meeting to deepen our coordination to resolve them,” Suzuki told reporters.

“A sharp yen weakening is seen in recent currency market trading. I’m concerned,” he said, “The government will watch the currency market even more closely while liaising with the Bank of Japan.”

Japan would respond appropriately as needed while coordinating with currency authorities from other countries in line with a G7 agreement on exchange rates, Suzuki added.

Meanwhile, the U.S. Treasury secretary paid her respects to slain former Prime Minister Shinzo Abe, Japan’s longest serving modern leader at a private wake on Monday evening, lauding his work to increase Japan’s prosperity and advance the status of women.

She canceled a public speech at the Port of Yokohama out of deference to Abe’s death, but will still meet privately with Japanese business leaders to discuss how improved supply chain resiliency and greater use of “friend-shoring” can help ease inflationary pressures and address the bottlenecks.

On Wednesday, Yellen will travel to Indonesia to meet with Suzuki and other Group of 20 finance officials for their July 15-16 gatherings. (Reporting by Andrea Shalal and Tetsushi Kajimoto; Editing by Chizu Nomiyama & Shri Navaratnam)