Congress Takes Aim at Japan on Yen

The Financial Times of London reports that House Democrats are pressing the Bush administration to persuade Tokyo to strengthen the yen, claiming the currency’s weakness is bolstering Japanese imports at the expense of US manufacturers.

In a letter to Treasury Secretary Hank Paulson, the House members alleged that Tokyo was pursuing a cheap currency to subsidise exporters.

The FT says that the pressure from Democrats sets up a confrontation with the US Treasury secretary, who argues the yen’s weakness reflects Japan’s economic fundamentals rather than a deliberate policy of manipulation.