TOKYO: The Bank of Japan on Tuesday boosted its view of the world's number-three economy as exports pick up on the yen's slide and providing some relief to the government with its growth plan stuttering.
Policymakers held fire on further stimulus and said they would maintain a plan to keep the yield on government 10-year bonds around zero, part of a broader bid to stimulate growth.
The bank's final meeting of 2016 came on the heels of stronger-than-expected November export data and the first rise for more than a year in its closely watched Tankan survey of business confidence.
"Exports have picked up," the bank said, adding that corporate and private spending were also on the upswing.
"Reflecting these moderate increases in demand both at home and abroad, and the progress in inventory adjustments, industrial production has picked up.
"Japan's economy is likely to turn to a moderate expansion."
The yen has fallen more than 17 percent against the greenback since Donald Trump's shock US presidential election win in November fanned speculation that his plans for big government spending and tax cuts will force the Federal Reserve to hike borrowing costs.
The Fed's indication last week that it could lift them three times next year battered the Japanese unit.
On Tuesday, dollar bought 117.48 yen from 117.07 yen earlier in the morning.
A weaker yen is good news for Japan's exporters as it boosts their competitiveness and profitability.
"The drop in the yen has given the bank some flexibility...It's taken pressure off the BoJ to ease more," said Toshihiko Sakai, a senior dealer at Mitsubishi UFJ Trust and Banking.
The bank noted that exports and industrial production are gathering steam, after saying they were "sluggish" in a November statement.
"With the economic outlook brightening and the yen weakening sharply, we expect both headline and underlying inflation to rebound strongly in coming months," Marcel Thieliant at research house Capital Economics said in a commentary.
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