Japan's Finance Minister Jun Azumi on Friday repeated his warning that the government may undertake decisive action to contain excessive gains in yen, which hit a seven-month high after the Federal Reserve's announcement of a new stimulus program.
Meanwhile, the Japanese government lowered its assessment of the economy for a second straight month, saying the recovery is "pausing" due to a slowdown in global economic activity.
The government would not rule out any measures to stem excessive forex moves and act decisively when necessary, Azumi said. The Bank of Japan will respond appropriately to the present situation when the policy board meets next week, he said.
Meanwhile, the Cabinet Office said in its monthly report that the economic recovery appears to be pausing due to deceleration of the world economic activity. The report noted that both industrial production and exports are in a weak tone. Private consumption is almost flat with some weak movements seen of late.
Corporate profits are showing signs of leveling off, while business investment is exhibiting some weak movements amid moderate growth. Firms' assessment of current business conditions improved marginally, mainly driven by large firms, the report noted.
The employment situation in the economy has shown signs of improvement, although "some severe aspects" still remained.
The Cabinet Office said that the government will deploy a broad range of policy measures intensively by fiscal 2013 "to mobilize goods, people, and money." Further slowing down of overseas economies and sharp fluctuations in the financial and capital markets under a high degree of uncertainty about the prospects of the Eurozone debt crisis are downside risks of the Japanese economy, it said.
The government said it will decisively work together with the BoJ towards the exit from deflation and to counter the slowdown of the economy. It also vowed to take steps to prevent the economy from falling into a "vicious cycle between yen appreciation and deflation."
The government decided on the "Medium-term Fiscal Framework" on August 31. The Cabinet Office said that as the Diet has not passed the bill on special provisions concerning the issuance of government bonds, the government decided on the execution of the general account budget from September.
by RTT Staff Writer
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