BASEL, Switzerland, May 12 - Bank of Japan Governor Toshihiko Fukui declined to comment on Monday on the yen's recent appreciation but said the current Japanese and global economic situation is not bad. Fukui, who has surprised markets with a series of quick-fire policy moves after replacing Masaru Hayami as governor in mid-March, was attending his first meeting as the head of the BOJ at the Bank for International Settlements in Basel. "We are counting the risk factors for the Japanese and global economies in the future. The current situation is not so bad," he told reporters before attending a BIS bi-monthly meeting.
When asked about the yen's recent appreciation and currency movements following U.S. Treasury Secretary John Snow's weekend comments that a cheap dollar would help U.S. exports he said: "No comment." The yen has risen four percent against the dollar in the past two weeks and on Monday was trading at half a yen below a 10-month high of around 116.00 hit last week.
Fukui has previously dismissed calls to guide the yen lower and warned against unlimited buying of government bonds. On Monday Fukui also declined to comment on calls for the BOJ to adopt more unconventional measures, such as buying foreign bonds or exchange-traded funds (ETFs) and adopting inflation-targeting. Under its two-year-old "quantitative easing" policy, the BOJ has been flooding the money market with liquidity and keeping interest rates at virtually zero. But the central bank has had no success in ending a four-year-long decline in general consumer prices or in propping up the struggling economy. Some proponents say this could be done by buying stocks, real estate and other assets in very large quantities, while others say that just declaring a target and raising people's inflation expectation itself would lower the real interest rate -- the nominal interest rate minus the inflation rate.//