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U.S. dollar edged up narrowly in Asian trade on Friday even as Japanese Prime Minister toned up his promise to take action to curb the rise of yen.
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Prime Minister Naoto Kan said on Friday he was ready to take bold action on currencies, by far the toughest words from Japanese decision-makers over the yen. Kan is scheduled to meet Bank of Japan (BoJ) Governor Shirakawa on Friday as the latter returns from the U.S.
The dollar was traded at 84.73 versus yen in Tokyo, as it made gains from the overnight New York rate of 84.37.
Echoing Kan, other Japanese authorities have also made remarks aimed at yen on Friday.
Minister of State for Economic and Fiscal Policy Satoshi Arai said on Friday that the strength in the yen and weakness in overseas economies were increasing the economy's downside risk.
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On Thursday, Japanese newspaper Asahi had reported that the government has all but decided to work with BoJ in efforts to rein in yen's rise.
According to the report, the government would rather have BoJ resort to further policy easing to check the rise of yen than taking the more politically sensitive action of intervening directly in the currency market which would mean a volte face from Tokyo's support to the G20 stance of letting markets determine currency moves.
Yen is hurting Japanese exporters and the extent of the market diffidence is manifest in the decline of Nikkei average by as much as 1.7 percent on Wednesday - a new 16-month low.
The report suggested that BoJ will, in all likelihood, make a policy announcement after its policy meeting which will be held during September 6-7.
However, BoJ doesn't have too many options on the table. The most likely action by the central bank will be a further expansion of its cheap fixed-rate loan programme for the banks.
The report also said the government was mulling measures to stimulate the economy, but analysts point out that expansionary policies will be an unaffordable luxury for the government whose public debt is close to 200 percent of the GDP.
