TOKYO (MNI) – The government will expand to around Y10 trillion a
lending program that will help private-sector firms finance foreign
acquisitions and investments in natural resources, with the aim of
reining in the Japanese currency, the Nikkei said on Thursday.

The daily said, without citing sources, that the government will
approve on Friday a package of policy responses to the strong yen,
including the hike to the lending program.

Under the original plan, the government had planned to set up some
$100 billion fund and lend money to private-sector firms through the
state-run Japan Bank for International Cooperation.

The state-backed bank’s dollar funding will come from a special
government account for foreign exchange interventions.

Other measures in the yen-curbing policy package include a Y1
trillion boost to government guarantees for the Innovation Network Corp.
of Japan, which will help the public-private partnership invest in
companies trying to turn the yen’s strength into an advantage through
overseas M&As, the Nikkei reported.

The government and Bank of Japan will form a special team to
monitor initiatives designed to address the strong yen, according to the
business daily.

The government will also make it clear its stance to prevent any
harmful rise in the value of the yen, by stating in a draft plan that
should the yen stage a sharp appreciation, “no measure will be
precluded,” the report said.

The draft plan also calls for the exploration of a wide range of
measures to bring stability to the international financial markets,
including nontraditional approaches, it said.

As part of such measures, the government will buy more bonds to be
issued by the European Financial Stability Facility, according to the
Nikkei.

Japan purchased around E2.7 billion worth of EFSF bonds between
January and June.

The yen surged to a record high of Y75.95 against the dollar in
August and has stayed around Y76-77, drawing safe-haven buying amid the
European sovereign debt crisis and U.S. balance-sheet problems.

tokyo@marketnews.com
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