TOKYO: The Bank of Japan on Thursday announced further easing measures as it looks to help safeguard the country's fragile economic recovery from the impact of a strong yen and a slowing global economy.
The bank said it would boost its asset buying fund by 5.0 trillion yen to 55 trillion yen ($723 billion), with the extra amount earmarked for the purchase of Japanese government bonds.
It also said its policy board voted unanimously to keep its key interest rate unchanged between zero and 0.1 percent.
The yen was barely changed at 76.00 to the dollar after the announcement compared to 76.03 yen beforehand.
"For the purpose of further enhancing the spread of monetary easing effects throughout financial markets, the Bank judged it appropriate to designate the 5 trillion increase in the Asset Purchase Programme for the purchase of Japanese government bonds," it said in a statement.
The bank's asset purchase fund is a key policy tool it uses to buy Japanese government bonds, corporate bonds and exchange traded funds.
However, one member of the nine-person board deemed the amount insufficient and voted against the move, instead favouring a 10 trillion yen increase.
By pouring liquidity into the market, the BoJ hopes to improve flows to individuals and companies to help encourage investment and improve business.
It also hopes, by relaxing credit conditions, to help weaken a strong yen that hit a new postwar high 75.71 against the dollar on Wednesday.
Japan's finance minister Jun Azumi earlier Thursday threatened government intervention in financial markets, complaining that speculators are using Europe's debt crisis as an excuse to push the currency higher.
"I have kept saying that we will take decisive steps against any excessive movement regarding market speculation, so I will closely monitor how the Tokyo market moves during the day," Azumi said.
However, Azumi has conceded it will be tough to again rally support from Japan's G7 counterparts for a concerted intervention to the weaken the yen, as happened when the unit surged in the aftermath of the March disasters.
Concerns are growing in Japan that the strong currency, which erodes the repatriated profits of exporters and makes exports less competitive, could undermine a fragile recovery from the March 11 earthquake and tsunami.
Japan's manufacturers have staged a rebound since the March disasters that left around 20,000 dead or missing and shattered crucial supply chains, heavily disrupting Japanese industry.
But fears have mounted that such efforts are being compromised by the strength of the yen, prompting fears more firms will shift production abroad.
Thursday's extra monetary easing follows the BoJ's August move to expand the scheme to buy securities and boost liquidity to 50 trillion yen amid worries over the strong yen, in tandem with a government market intervention in a bid to weaken the unit.
It added that despite the headwinds, it expected the economy to continue towards recovery.
"Although an adverse effect from a slowdown in overseas economies and the appreciation of the yen will continue for the time being, Japan's economy is expected to return to a moderate recovery path," the BoJ said.
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