Former Japanese Vice Minister of Finance for International Affairs Takehiko Nakao says a Bank of Japan rate hike would help strengthen the yen and align economic goals between the central bank and Prime Minister Takaichi's administration. Speaking with Bloomberg's Shery Ahn on "Bloomberg: The Asia Trade," Nakao discussed Japan's fiscal policy and monetary path forward.

Nakao emphasized that coordinated policy between the BOJ and government would benefit Japan's economy. He suggested that monetary tightening could help address currency weakness that has persisted as the yen traded near 30-year lows against the dollar. The former finance official's comments come as markets watch for potential shifts in Japan's ultra-loose monetary policy.

With inflation rising in Japan and global central banks hiking rates, Nakao's endorsement of a BOJ rate increase signals growing support for policy normalization. His perspective carries weight given his former role overseeing international finance policy. The yen has weakened significantly in recent years, making imports more expensive and complicating the Bank of Japan's efforts to achieve stable prices.