The youth was identified as Amajato Atomu, a native of Nagasaki in Japan.
Some locals spotted the body this morning and called the police.
The body has been recovered and sent for a post-mortem, a police officer said, adding that they were trying to find out details about the deceased and how he came to Varanasi.
Police suspect that the youth might have been murdered yesterday and then his body hanged from the tree trunk.
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