Global Market: US urges BOJ to keep raising rates, flags persistent yen weakness despite narrower yield gap

US Treasury has urged the Bank of Japan to continue raising interest rates, flagging persistent yen weakness despite a narrowing US-Japan yield gap. In its semi-annual currency report, the Treasury noted the yen has fallen 51% between end-2011 and end-April 2026, describing it as substantially undervalued, with the currency hitting a 40-year low against the dollar. The BOJ raised its policy rate to 1% in June 2025, the highest in 31 years, but yen weakness continues amid concerns that PM Takaichi's administration could resist further tightening.