US Treasury Warns on Yen Volatility, Urges BOJ Rate Hikes

The US Treasury Department has expressed concern over excessive yen volatility, stating that it is undesirable for the currency. In its semi-annual currency report released on Thursday in Washington, the Treasury noted that yen weakness persists despite narrowing U.S.-Japan interest rate differentials.

The statement from the Treasury also called for further interest rate hikes by the Bank of Japan (BOJ), citing strained household purchasing power due to inflation, even as nominal wages rose notably. 'Monetary policy normalisation would help anchor inflation expectations and reduce excessive exchange rate volatility,' the report said.