Currency market intervention by the Bank of Japan in January led to the largest purchase of U.S. Treasuries in two years, according to the most recent figures released by the Treasury Department.

In January, foreign purchases of U.S. Treasuries hit $46.9 billion, with the Japanese leading the charge at $31.9 billion. The buying binge -- courtesy of the Bank of Japan reinvesting the proceeds of yen sales intended to keep that currency weak -- will help keep financing the U.S. current account deficit.

That may have serious consequences in the future, according to Robert Brusca, chief economist at Fact and Opinion Economics.

By preventing the dollar from losing too much of its value against the yen, Japan is effectively extending credit to the U.S. through its purchase of government securities. As a result, exports will remain more expensive and the U.S. current account deficit, which hit a record $541.8 billion by the end of last year, has little prospect of shrinking.

It's a case of our major economic competitors wanting things both ways, Brusca said. "Japan and Europe are complaining about the weak dollar and the size of the current account deficit," he said.

The uneven U.S. recovery is hindering economic growth in the European Union and Japan, and Japan's recent purchases are making it harder for the U.S. to take a clearer lead in worldwide economic growth, he said.

"It's like having your daughter come home from school and say she did badly on the test and it's your fault because you didn't force her to study," said Brusca.

Foreign net purchases of U.S. equities dropped to $12.8 billion in January, from $13.33 billion in December, the data showed.

The high inflows could eventually lead to interest rate spikes, a sharp fall in the dollar and an overall increase of foreign ownership and control of U.S. companies, Brusca said.

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