The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥88.70 level and was capped around the ¥89.15 level.  As expected, Bank of Japan's Policy Board kept its overnight call rate target unchanged at 0.1%. BoJ Governor Shirakawa said the government and the central bank share the view that prices will keep declining.  Shirakawa also defended his belief that purchasing more corporate bonds will not help the economy, saying When there is a shortage of demand in the economy, providing liquidity alone won't help to push prices higher.  Most BoJ-watchers believe the central bank will keep interest rates unchanged through at least most of 2010.  The government today reported that the economy is in a mild deflationary phase and finance minister Fujii reported there is a sense of crisis about the declining prices. This was the first time the government reported the economy is in a deflationary phase since 2006.  Referring to the economy, the central bank reported Japan's economy is picking up mildly due to various policy measures taken at home and abroad, although the momentum of a self-sustaining recovery in domestic private demand remains weak.  Even though both the BoJ and the government acknowledge deflationary pressures, the two cannot agree on policy responses.  BoJ's Policy Board recently predicted core consumer prices will decline 1.5% in the year ending March 2010, decline 0.8% in the fiscal year ending March 2011, and decline 0.4% in the fiscal year ending March 2012.  The central bank recently reported it will stop its purchase of corporate debt and commercial paper at the end of 2009.  The Nikkei 225 stock index lost 0.54% to close at ¥9,497.68.  U.S. dollar offers are cited around the ¥94.75 level.  The euro moved lower vis-à-vis the yen as the single currency tested bids around the ¥131.80 level and was capped around the ¥132.95 level.  The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥146.45 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥87.10 level. In Chinese news, the U.S. dollar came off vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8289 in the over-the-counter market, down from CNY 6.8295.  People's Bank of China Governor Zhou reported China is passive on the U.S. dollar and that its value does not impact the Chinese economy.  Zhou also said the central bank will continue to maintain the moderately loose monetary policy and expansionary fiscal policy for a while.  U.S. Treasury Secretary Geithner this week reported he is quite confident China will relax controls on its currency.