— Recasts With Background
— Japan’s Noda: Govt, BOJ To Cope With Strong Yen Appropriately
— Japan’s Noda: Need Close Cooperation on Eco, Mkts, Among G7, G20

TOKYO (MNI) – Japanese Finance Minister Yoshihiko Noda on Friday
said he believes that the Bank of Japan is considering various monetary
policy options in a joint effort with the government to guard the
export-led recovery against the drag from the yen’s rise.

“I think the BOJ is considering various options” to help stop the
yen’s strength from undermining Japan’s export-led recovery, Noda told
reporters after a cabinet meeting, without elaborating further.

He said the government and the Bank of Japan will cope with the
recent rise in the yen in an “appropriate and timely manner.”

At its last policy meeting on Aug. 4, the BOJ board decided to
expand the scale of its asset-buying program to Y15 trillion from Y10
trillion, raising the total — including three- and six-month funding
operations — to Y50 trillion from Y40 trillion.

The BOJ shortened it from a two-day meeting in order to take quick
action immediately after the MOF-orchestrated yen-selling intervention
on the day.

“We are always in close contact with the government and exchange
views on economic and market conditions,” Shirakawa told reporters after
the Aug. 4 board meeting.

The BOJ has maintained the target for the overnight lending rate
among commercial banks at zero to 0.1%, with little room left for
lowering interest rates, but it hopes to facilitate bank lending to
needy firms by ensuring ample liquidity in financial markets and
offering low-interest loans to banks.

The BOJ board would hold an extraordinary meeting later this month
to discuss additional sentiment-boosting monetary easing measures should
the yen rise become rampant and share prices keep falling, sources
familiar with BOJ policymaking have told Market News.

For BOJ policymakers, the next trigger for a further credit easing
could come from a speech by Federal Reserve Chairman Ben Bernanke on
Aug. 26 at an annual symposium at Jackson Hole, Wyo. hosted by the
Federal Reserve Bank of Kansas City.

The BOJ is scheduled to hold its next policy-setting meeting on
Sept. 6-7.

Noda noted that speculative moves are partly responsible for the
recent forex market fluctuations.

Meanwhile, Noda pointed to the positive side of having a stronger
currency, saying it helps Japanese firms in buying overseas firms and
resources.

He said: “We have to cooperate closely” on the recent economic and
market moves among the Group of Seven major nations and the Group of 20,
a forum that brings industrialized and emerging economies together.

The dollar was quoted around Y76.44 to the dollar in Asian
afternoon trading on Friday.

Late on Thursday, Noda repeated the MOF’s mantra in a speech that
the government is closely watching the forex market and will take
“decisive action” when it’s necessary.

“We will do our best so that Japan will not end up being stuck in
severe conditions under the severe appreciation the yen,” he said.

The recent stock market sell-off, which reflects concern over
global economic growth, will have a negative impact on Japan’s personal
consumption, Noda said today.

But he added that the Japanese economy will post growth in the
July-September quarter after contracting for three quarters in a row.

Noda repeated his recent comments that the government can include
measures to help shield the economy from the adverse effect of the yen’s
rise in the third supplementary budget for rebuilding the northeastern
regions hit by the March 11 earthquake disaster.

In the past Japan has put together extra budgets to provide
emergency financial aid to small businesses — including subcontractors
of major automobile, electronics and machinery makers — in order to
keep them afloat as the high yen threatened to erode their profits.

tokyo@marketnews.com
** Market News International Tokyo Newsroom: 81-3-5403-4833 **

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