TOKYO, Japan: As Japan prepares for critical trade talks with the United States, a top policymaker has stressed the need to strengthen the yen, without resorting to selling U.S. Treasury holdings.

Itsunori Onodera, chair of the ruling Liberal Democratic Party's Policy Research Council, said on Sunday that the yen's prolonged weakness has raised household living costs and must be addressed by boosting Japan's industrial competitiveness.

"The weak yen has been among factors pushing up prices," Onodera said during an appearance on public broadcaster NHK. "To strengthen the yen, it's important to strengthen Japanese companies."

He also pushed back against suggestions that Tokyo should use its vast holdings of U.S. Treasuries as leverage in trade negotiations.

"As a U.S. ally, the government shouldn't think about intentionally using U.S. Treasury holdings," Onodera said, responding to a proposal by an opposition lawmaker.

Japan is the largest foreign holder of U.S. Treasuries, with $1.079 trillion as of January. China, by comparison, held $760.8 billion.

Trade talks with the U.S. are set to begin this week, with currency policy expected to be a key issue. Two people familiar with the negotiations said Tokyo's economic revitalisation minister Ryosei Akazawa will meet Treasury Secretary Scott Bessent on April 17.

Japanese officials are anticipating pressure from Washington to support the yen and may also face criticism over the Bank of Japan's slow exit from ultra-loose monetary policy.

Japan has long prioritized preventing the yen from becoming too strong, fearing the impact on its export-driven economy. However, a steep decline in the currency, driven by widening interest rate differentials with the U.S., has fueled inflation concerns.

Tokyo intervened to buy the yen in 2022 and again last year when the dollar surged to nearly 160 yen. Recently, the yen has rebounded, hitting a low of 142.895 against the dollar on Friday.

In recent weeks, markets have experienced intense volatility in the wake of U.S. President Donald Trump's tariff announcements. The sell-off in Treasuries, especially during Asian trading hours, raised speculation that China was offloading its holdings.

The upheaval contributed to Trump's decision to implement a 90-day pause on his "reciprocal" tariff plan, with Treasury Secretary Bessent reportedly playing a central role in that decision.