Yen Balance: BOJ's Tightening Strategy Under U.S. Scrutiny

The U.S. Treasury Department has advised the Bank of Japan (BOJ) to persist in monetary tightening efforts to address the yen's weakness and facilitate a rebalance of bilateral trade. Emphasizing economic fundamentals like growth and inflation, this adjustment aims to stabilize the yen's position against the dollar.

The Treasury recommends that government investment vehicles focus on achieving risk-adjusted returns through diversified investments abroad, rather than committing resources with the intent of influencing competitive exchange rates.

As highlighted in the Treasury's report, no major U.S. trading partners are manipulating currencies, though Japan, among others, remains under observation for foreign exchange practices. The BOJ's slow rate hikes are seen as maintaining yen weakness despite recent inflation and growth adjustments.

(With inputs from agencies.)