The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥91.80 level and was capped around the ¥92.65 level.  Bank of Japan official Shinobu Nakagawa reported it is possible that official Japanese interest rates will remain near zero per cent until 2011 on account of the poor economic outlook.  Nakagawa also reported the appreciating yen helps to support demand for Japanese government bonds.  There is increasing speculation BoJ could increase its bond purchase activity to avert a relapse into another recession.  Currently, the central bank purchases around ¥1.8 trillion in Japanese government bonds every month and it may decide to up its purchases to counter intense deflationary pressures.  A new announcement could be made as early as H1 2010.  An anonymous Ministry of Finance official reported finance minister Kan and U.S. Treasury Secretary Geithner agree on exchange rate policy.   New finance minister Kan last week said it is his responsibility to respond to moves in the currency market but added the markets should determine rates.  Last Thursday, Kan indicated the yen should be weaker whereas his predecessor, Fujii, green-lighted a stronger yen when he first took office last year.  Chief Cabinet Secretary Hirano said the government should not make any comments that could impact the markets.  Prime Minister Hatoyama last week said rapid exchange rate moves are not good and unwelcome. Most traders believe the Japanese government will probably try to orchestrate a weaker yen to help counter deflationary pressures and stimulate foreign trade.  The Nikkei 225 stock index climbed 1.09% to close at ¥10,798.32.   U.S. dollar offers are cited around the ¥94.75 level.  The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥134.35 level and was supported around the ¥133.40 level.  The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥149.60 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥91.05 level. In Chinese news, the U.S. dollar depreciated vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8263 in the over-the-counter market, down from CNY 6.8276.   Last week, People's Bank of China guided interest rate expectations higher by selling three-month bills at higher rates for the first time in nineteen weeks.  This evidences the central bank's attempt to tighten liquidity.   PBoC-watchers believe the central bank may lift interest rates for the first time in three years by September.  There is increasing speculation that China's economy could slow dramatically this year.  Last week, People's Bank of China yesterday reported it will support relatively fast economic growth and manage inflation expectations.  Additionally, PBoC noted it will target moderate loan growth in 2010.  Data released in China overnight saw December exports climb 17.7% y/y, the latest evidence that China remains the key driver of global economic growth.  These data also mean that China has overtaken Germany as the world's largest exporter.