(
Xinhua)
20:47, February 19, 2013
TOKYO, Feb. 19 (Xinhua) -- Japanese Finance Minister Taro Aso on Tuesday stated that the central bank would not be buying foreign bonds as part of its monetary easing methods.
Speaking at a news conference following a Cabinet meeting earlier in the day, Aso said that he rejected experts' ideas that the Bank of Japan (BOJ) could incorporate foreign bond purchases as part of the bank's monetary easing methods.
"We have no intention to ask the BOJ to purchase foreign bonds, " Aso said, in a move aimed to dispel rumors that the government was leaning on the central bank to manipulate its currency, as foreign bond purchases essentially involve large-scale yen selling.
The BOJ has come under pressure from Prime Minister Shinzo Abe' s administration, with the prime minister himself on Monday suggesting in parliament that foreign bond buying could be a feasible option as part of the BOJ's monetary easing endeavors.
Purchasing foreign bonds straight from the market could help make financial conditions more favorable here, by forcing the yen lower and boosting domestic demand, as the nation continues to grapple with chronic deflation and a shrinking economy.
Japan's economy contracted at an annualized rate of 0.4 percent in the October to December quarter, on declining exports and business investment, marking the third straight quarter of contraction, data released by the government revealed Thursday.
The figures released by the Cabinet Office showed that the economic contraction was largely due to a 3.7 percent decline in the export of Japanese goods and services abroad, which have been hampered by the yen's relative strength.
Despite mounting pressure from the government on the bank to do more to tackle deflation, the central bank has remained steadfast in trying to maintain its autonomy from the government, as the bank is prohibited from intervening in currency markets, as such moves can only be made by the finance ministry.
However, the government has controversially suggested that it will encroach on the central bank's operations should the bank fail to achieve its recent 2 percent inflation target.
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