| |
| |
 |
| |
|
| |
|
| |
|
TOKYO: Japanese Prime Minister Naoto Kan said on Friday he would outline measures to counter the effects of the yen's strength and help safeguard a fragile economic recovery next week.
In a hardened stance from his earlier rhetoric, Kan also stepped up pressure on the central bank to take further steps to support a slowing economy that remains mired in a damaging cycle of deflation.
"Given the yen's current rise and the severe economic situation, we will decide on the outline of economic measures on August 31 and work out concrete measures based on it as soon as possible," Kan said.
"Excessive volatility in currency markets negatively affects (Japan's) economic and financial stability and I recognise its gravity. I will take determined steps when necessary."
In a bid to cope with the strong yen and risks from an overseas slowdown, Kan said the government would "implement policy measures that will be immediately effective and have a high potential of creating jobs".
He said he would meet BoJ governor Masaaki Shirakawa as soon as the central bank chief returns from a trip to the United States.
"I expect (the bank) to carry out financial policy promptly," he said.
The BoJ has long kept its key rate at a rock-bottom 0.1 percent and analysts question how much more room it has for further manoeuvre.
"It's a positive message and puts pressure on the Bank of Japan," said Yutaka Harada, chief economist at Daiwa Institute of Research, of Kan's bolder stance.
"But the market has yet to show how serious it thinks the government is."
Kan's renewed pressure on the central bank came as dreary consumer price data Friday cast a darker shadow over the government's goal of ending deflation in the fiscal year starting April 2011.
A strong yen makes imports cheaper, helping keep prices low and maintain a damaging cycle of deflation, which was again evident in July where core consumer prices eased 1.1 percent, the 17th consecutive monthly fall.
Persistent deflation prompts consumers to defer purchases in the hope of further price falls and deters corporate capital spending.
The core consumer price index, excluding volatile fresh food items, was in line with expectations, according to a Dow Jones Newswires poll of economists.
But the price data added to doubts about Japan's recovery, which is under extra pressure from a strong yen and global economic uncertainty.
"The data shows that the downward pressure on prices cannot be eradicated easily," said Hideki Matsumura, economist at Japan Research Institute. "The effect of a high yen will start showing its real effect in a few months."
The yen this week hit 15-year highs against the dollar, threatening exporters as it erodes repatriated profits, inflicting damage on Japan's key growth driver.
Japan remains under pressure to act to safeguard its fragile recovery. Weak gross domestic product growth of an annualised 0.4 percent in the second quarter pointed to a looming slowdown.
On Wednesday, data showed export growth had slowed for a fifth straight month in July, as uncertainty over the global economy weighed on a sector crucial to offsetting weak domestic demand.
In one glimmer of light, however, unemployment edged lower to 5.2 percent in July in its first fall in six months, data showed Friday, dropping 0.1 percentage point from June.
The figure was slightly better than market expectations of 5.3 percent, June's level.
In separate data, Tokyo said household spending in July was up 1.1 percent from a year ago, but down 0.4 percent from June, suggesting domestic demand remains soft.
Amid speculation that Kan would discuss plans to reinvigorate the economy and counter the high yen later Friday, Japanese shares closed 0.95 percent higher.
- AFP/ir
|
