The Bank of Japan took minor steps Monday to fend off the strong yen, while the government planned its own meeting to keep the economy from weakening.
The central bank in an emergency meeting expanded its fund supply to banks, but kept interest rates steady, which pared some early Japanese share market gains.
BOJ Governor Masaaki Shirakawa planned a news conference to explain the moves, and was set to meet Prime Minister Naoto Kan later.
The yen had eased slightly against the dollar and euro when the central bank said it would hold the emergency meeting, but held firm after the BOJ meeting.
Former BOJ Deputy Governor Shijuro Ogata said Japan may be struggling to deal with the yen near its highest in 15 years, but its trading partners are comfortable with current forex levels.
[Shijuro Ogata, Former BOJ Official]:
"I would suspect that American and European policymakers are not unhappy with the weak dollar and weak euro."
Japanese Cabinet ministers also planned to meet Monday on basic steps to cope with the yen, but Ogata said the Kan government is handcuffed by the mountain of debt it inherited.
[Shijuro Ogata, Former BOJ Official]:
"Earlier governments accumulated enormous fiscal deficits, so they cannot easily activate additional fiscal measures."
A recent survey showed two-thirds of Japanese firms saying the yen's strength is squeezing their profits, while 40 percent planning to shift production overseas if the currency doesn't weaken.
