Japan must take action to strengthen the yen, according to Itsunori Onodera, head of the ruling Liberal Democratic Party’s Policy Research Council. Speaking on NHK, Onodera warned that the yen’s persistent weakness has increased living costs for Japanese households by driving up import prices and inflation. He emphasized the need to enhance Japan’s industrial competitiveness to support a stronger currency.
Ahead of critical trade negotiations with the U.S., Onodera also pushed back against suggestions that Japan should use its vast U.S. Treasury holdings as leverage. With $1.079 trillion in Treasuries—the largest foreign stake—he insisted Japan, as a key U.S. ally, should not weaponize its debt holdings to retaliate against President Donald Trump's newly imposed tariffs on Japanese automakers.
His comments reflect growing concern in Tokyo about the economic impact of the yen’s depreciation. Despite recent gains, the currency remains well below historical levels after years of ultra-loose monetary policy from the Bank of Japan, while the U.S. Federal Reserve has steadily raised rates. Past interventions to boost the yen occurred in 2022 and 2024 when the currency neared 160 per dollar.
The upcoming meeting between Japan’s top negotiator Ryosei Akazawa and U.S. Treasury Secretary Scott Bessent is expected to include discussions on currency policy. Tokyo may face pressure to prop up the yen, while the Bank of Japan’s slow pace of tightening could also come under scrutiny.
Recent market turmoil triggered by Trump’s tariff announcements included a rare, massive sell-off in U.S. Treasuries, fueling speculation about foreign offloading, particularly by China. The volatility contributed to Trump’s decision to pause the tariff rollout for 90 days, with Bessent reportedly playing a key role in the decision.


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