Japanese Prime Minister Naoto Kan has ordered his industry minister to draw up a plan to boost domestic investment and keep jobs at home as a strong yen pressures Japanese firms to move factories abroad, reports said yesterday.
He has instructed the Minister of Economy, Trade and Industry Masayuki Naoshima to compile “a program to promote domestic investment” by October.
Kan plans to incorporate part of the blueprint into a fresh stimulus he will outline tomorrow, the Yomiuri Shimbun and other media reported.
“In order to fix the economy, the first to do is [create] jobs, the second to do is jobs,” Kan told reporters on Saturday, the Yomiuri said.
The main feature of the plan would be measures to promote domestic investment from about ¥200 trillion (US$2.36 trillion) of cash and deposits kept by Japanese companies, the reports said.
Kan renewed pressure on the central bank to take additional monetary easing measures, reportedly saying: “I’d like to see the Bank of Japan governor as soon as he returns [from a trip to the US] and mention what we expect them to do.”
On Saturday, Minister of Finance Yoshihiko Noda said Japan will take “bold” action if necessary to curb the yen’s surge to a 15-year high, and called on the Bank of Japan to do more to spur economic growth.
“We are closely watching the markets with great interest and will take bold steps as needed, as the prime minister said,” Noda told reporters on Saturday in Beijing after meeting with Chinese counterpart Xie Xuren (謝旭人).
The central bank “has ways to improve the current state of the economy and I expect them to come up with ideas,” Noda said.
The remarks came after Kan said on Friday he would outline measures to counter the effects of the yen’s strength this week, implying possible intervention by saying he would take “determined steps when necessary.”
Roughly 40 percent of Japanese firms say they would move factories overseas if the yen stays at its current high of around 85 to the US dollar, according to an official survey released on Friday.
The Bank of Japan, which is scheduled to hold its next policy meeting on Monday and Tuesday next week, may hold an emergency session early this week to consider more easing, Nikkei English News reported on Saturday, without saying where it obtained the information. Bank of Japan Governor Masaaki Shirakawa is scheduled to return to Tokyo from the US, where he is attending a Federal Reserve symposium, today.
The benchmark Nikkei 225 Stock Average has fallen 5.9 percent since the Bank of Japan’s last meeting, amid signs of slowing global growth.
The yen ended last week at 85.23 per US dollar, having risen as high as 83.60 on Aug. 24, the strongest since June 1995. Japan’s currency gained 9.2 percent against its US counterpart this year.
Noda said currency market moves “are having a big impact and is one reason for the drop in stock prices in Japan.”
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