The recent sharp fall in value of the Japanese yen is a cause for concern

because it might hamper efforts to cut global imbalances in trade, the Treasury Department said in a report to Congress published Wednesday.

''The yen's weakness is a matter of concern, with undesirable consequences for the global adjustment process," the Treasury said, noting that it was happening amid falling Japanese stock prices and lower values for other Japanese assets."The G-7 will keep these developments under review," the Treasury report said, referring to the group of seven industrial countries that groups the United States, Japan, West Germany, Britain, France, Italy and Canada.

The G-7 met April 7 in Paris and expressed concern over the yen's falling value but announced no special measures to prop it up.

Before the report was released, Treasury Secretary Nicholas Brady testified before the House Ways and Means Committee he felt foreign exchange markets have been relatively stable when viewed in the context of the last two to three years. He said the yen was not far from values it was at two to three years ago.

But Mr. Brady said there "has to be a concern" about the effect on the U.S. trade deficit of a strong dollar vs. a weak yen.

A lower-valued yen makes Japanese products cheaper for Americans to buy when Japan already has a surplus on its trade with the United States.

The Commerce Department said Wednesday the U.S. Trade deficit with Japan increased in February to $3.12 billion from $2.86 billion in January.