Yen gains

Tokyo - The yen rose in Asia on Tuesday after Japan's finance minister moved to reassure the central bank's independence, while also saying there were no plans to buy foreign bonds to drive up inflation.

The dollar slipped to 93.73 yen in Tokyo midday trade from 93.95 yen in London on Monday, while the euro was weaker at 125.07 yen and $1.3346 against 125.43 yen and $1.3353.

Japan's Deputy Prime Minister Taro Aso. File photo: Reuters. Credit: Reuters

US markets were closed Monday for a national holiday.

Finance chief Taro Aso told a press briefing Tuesday morning that Tokyo has “no intention” of asking the Bank of Japan to buy foreign bonds as part of its monetary easing policy.

Such purchases could push the yen down, as the bank sells the currency to buy foreign bonds, and draw more anger from some critics, particularly in Europe, who have accused Tokyo of manipulating the yen's recent steep decline.

Japanese officials have repeatedly fended off the criticism, which has seen Tokyo accused of risking setting off a global currency war in which rival nations drive down their currencies to gain a trade advantage.

Aso's comments - which came a day after Prime Minister Shinzo Abe mentioned such a move - were “the sensible thing to say considering international norms”, said Daisuke Karakama, vice president of forex sales at Mizuho Corporate Bank.

Regarding the independence of the central bank Aso said at Tuesday's news conference Tuesday said the new government was “not thinking about a law change at the moment”.

Abe had also warned Monday he would “consider revising the BoJ law” if it could not deliver on its two percent inflation target outlined last month under political pressure.

The premier, who swept to power in landslide December elections, signalled he may rein in the Bank of Japan's independence if it fails to fall into line with his government's demands to boost the economy.

Abe was not specific about the possible legislative changes, but he has previously mused about reeling in the BoJ, drawing global criticism.

The gain in the yen reversed Monday's losses fuelled by news Japan had avoided being labelled a currency manipulator in a statement from the Group of 20 leading economies at a weekend meeting.

“The statement pledged not to 'target our exchange rates for competitive purposes', taken as a green light for more QE (quantitative easing) in Japan and a weaker yen,” National Australia Bank said in a note. - Sapa-AFP