Japan policymaker wants stronger yen, says Tokyo shouldn't sell Treasuries

Japan must strengthen the yen, such as by helping boost the country's industrial competitiveness, as the currency's weakness has pushed up households' living costs, the ruling party's policy chief said on Sunday.

Ahead of trade talks with the U.S., Itsunori Onodera, chair of the Liberal Democratic Party's Policy Research Council, also said Japan should not intentionally sell its U.S. Treasury holdings, the largest outside the United States, in retaliation against tariffs levied by President Donald Trump.

"As a U.S. ally, the government shouldn't think about intentionally using U.S. Treasury holdings," Onodera told a programme on public broadcaster NHK, rejecting an opposition lawmaker's suggestion that Tokyo use its huge holdings of U.S. government debt as a negotiating tool in bilateral trade talks.

By blaming the weak yen for accelerating inflation, Onodera could be signalling that Japanese policymakers consider the yen's downtrend, rather than its recent rebound, as the bigger problem for the economy.

"The weak yen has been among factors pushing up prices," Onodera said. "To strengthen the yen, it's important to strengthen Japanese companies."

The bilateral trade negotiations this week will likely include the thorny topic of currency policy, with some officials privately bracing for Washington to call on Tokyo to prop up the yen.

The slow pace at which the Bank of Japan is raising interest rates from ultra-low levels could also come under fire, sources have told Reuters.

Tokyo's top trade negotiator Ryosei Akazawa, the minister for economic revitalisation, will meet Treasury Secretary Scott Bessent on Thursday, two people familiar with the negotiations told Reuters.