TOKYO (Reuters) - Japanese Finance Minister Katsunobu Kato on Wednesday ruled out using the country's U.S. Treasury holdings as a bargaining tool against President Donald Trump's decision to slap tariffs against imports from Japan.

"We manage our U.S. Treasury holdings from the standpoint of preparing for in case we need to conduct exchange-rate intervention in the future," not from the standpoint of bilateral diplomacy, Kato told parliament.

Kato was responding to a ruling party lawmaker's call for Japan to consider selling its U.S. Treasury holdings, which is part of the country's huge foreign reserves, as a countermeasure against U.S. tariffs.

The government does not see Japan's foreign reserves as excessively large, adding it had no pre-set standard on what the appropriate size would be, Kato said.

Unloading Japan's foreign reserves would also mean selling foreign assets in exchange for yen, which would be tantamount to yen-buying currency intervention, he said.

"We should be cautious about taking such steps regardless of the size of such operations," Kato added.

Japan holds roughly $1.27 trillion in foreign reserves. While the government does not disclose the composition, analysts estimate that most of it is composed of U.S. Treasury debt.