The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥90.15 level and was supported around the ¥91.30 level. Bank of Japan Governor Shirakawa said the central bank’s previous zero per cent interest rate policy supported the economy but had side effects and former BoJ official Okina reported There is no real positive impact from zero rates, the adverse effect (on money markets) overrides it. Most traders believe BoJ’s Policy Board will keep the overnight call rate unchanged at 0.10% this week following last month’s 0.2% reduction. The central bank is expected to announce additional measures to enhance corporate financing and detail its plans to purchase commercial paper outright from financial institutions. The central bank may also expand its list of eligible collateral for its lending programs. Shirakawa also indicated the amount of banks’ bad loans to rise above the current estimate of US$ 1.4 trillion. Data released in Japan today saw revised November industrial output off 8.5% m/m. The Nikkei 225 stock index gained 0.32% to close at ¥8,256.85. U.S. dollar offers are cited around the ¥104.15 level. The euro moved lower vis-à-vis the yen as the single currency tested bids around the ¥118.45 level and was capped around the ¥122.15 level. The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥130.45 level while the Swiss franc moved lower vis-à-vis the yen and tested offers around the ¥79.55 level. The Chinese yuan gained ground vis-à-vis the U.S. dollar as the greenback closed at CNY 6.8356 in the over-the-counter market, down from CNY 6.8374. A Chinese government official said People’s Bank of China does not have much room to reduce interest rates further. Morgan Stanley lowered its 2009 growth forecast to 5.5%.