US Treasury Slams Yen Undervaluation, Pressures BOJ to Hike Rates

The US Treasury Department has expressed concern about the Japanese yen's significant undervaluation in its semi-annual foreign exchange report. The report noted that the yen's exchange rate has plummeted by 51% since 2011, reaching a 40-year low against the dollar.

The Treasury urged the Bank of Japan (BOJ) to continue raising interest rates to curb excessive exchange-rate volatility and stabilize the yen. However, markets expect the BOJ to hold rates steady at its upcoming meeting on July 31, with some predicting a rate hike in December.

Japan's finance minister has warned that the government is prepared to intervene in foreign-exchange markets if necessary, while fresh inflation data shows that Japan's core CPI rose 1.6% year-over-year in June, supporting the case for further rate hikes.