Japan finance minister urges BOJ to be mindful of weak-yen risks
By Leika Kihara
TOKYO (Reuters) - Japanese Finance Minister Taro Aso urged the central bank on Tuesday to be mindful of the risk of causing sharp, unwelcome falls in the yen when it decides on whether to expand its already radical stimulus programme.
Asked in parliament about declines in the yen resulting from the BOJ's massive monetary easing, Aso said he hopes the central bank guides monetary policy taking into account that volatile exchange rates are undesirable for the economy.
"A weak yen is sometime good (for the economy), while at other times a strong yen could be good... It's important that the yen moves mildly and steadily in a way reflecting economic fundamentals," he said.
Some lawmakers have criticised the BOJ's unexpected decision to expand monetary stimulus last October as having triggered excessive falls in the yen that have boosted import costs and hurt households' disposable income.
Aso's remarks underscore a growing view within the government that the BOJ should not persist in hitting its 2 percent inflation target in the coming fiscal year, and give itself more time if the underlying slowdown in inflation is driven mostly by slumping costs of oil.
Aso offered a cautious view on whether Japan should be part of a China-led development bank, saying that Tokyo "does not need to sign in" on joining the bank unless China lays out clear rules on when and what conditions it will provide loans.
China has approached Japan on joining the Asian Infrastructure Investment Bank (AIIB) since last year's Group of 20 gatherings, though it did not sufficiently answer Tokyo's requests for details on where its headquarters will be, who will make the final decision on loan extensions and on what terms, Aso said.
Aso signalled for the first time on Friday that Tokyo could be part of AIIB if it can guarantee a credible mechanism for providing loans, though other top government officials took a more sceptical stance.
Japan is hesitant to join out of concern over China-led lending practices, the impact on its relations with Washington and over the AIIB's potential rivalry with the Asian Development Bank (ADB), the Manila-based multilateral institution dominated by Japan and the United States.
(Editing by Chang-Ran Kim & Kim Coghill)
