, TOKYO, Mar 11 – Tokyo’s pick to head the Bank of Japan on Monday ruled out purchases of foreign bonds to stoke the economy, as the country faced criticism it was engineering a yen devaluation.
Some politicians and economists have said the central bank should adopt such measures as a policy option, which would likely push the value of the yen down further as it would require selling huge amounts of the unit to purchase foreign-denominated debt.
That could aggravate months-long criticism from abroad, particularly in Europe, that Tokyo was devaluing the unit to help exporters, risking a global currency war that would see rival nations try to push down their currencies.
Haruhiko Kuroda, a finance veteran expected to become Japan’s top central banker, told a parliamentary confirmation session Monday that “there is no need to consider” foreign-bond buying as a policy option.
“It is the government’s responsibility to achieve stability in foreign exchange markets,” Kuroda added.
“It is not part of the BoJ’s duty as a central bank. Its duty is to stabilise prices.”
The BoJ routinely buys Japanese government bonds as a way to inject easy money into the market to help lift the economy, in a move similar to the US Federal Reserve’s quantitative easing programme.
Kuroda also said under his stewardship the BoJ would move to meet a two-percent inflation target that policymakers adopted in January, aimed at reversing years of falling prices that have crimped private spending and business investment.
The longtime BoJ critic said previous efforts by the bank to stoke the world’s third-largest economy have fallen short.
“Since monetary easing actions so far haven’t been sufficient, I will take every measure possible to achieve a two-percent target if approved as governor,” Kuroda said.