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Finance Minister Masajuro Shiokawa on Tuesday again tried to talk down the yen, demand for which is growing as confidence in the U.S. economy melts and New York stock prices slide.

“The important thing is stability,” Shiokawa said of the currency exchange market. “It’s a bit too volatile.”

The Bank of Japan bought some $3 billion of the U.S. currency in Tokyo on Friday in its third intervention in two weeks to curb the yen’s upswing.

The yen rose to the mid-123 level Tuesday in Tokyo amid quiet trade, with market players wary of further dollar-buying, yen-selling intervention by the BOJ.

At 5 p.m., the yen was quoted at 123.39-43 against the dollar, compared with Monday’s 5 p.m. quotes of 123.55-65 in New York and 124.27-30 in Tokyo.

The yen climbed to the day’s high of 123.35 during afternoon trade.

Shiokawa said the government will “take steps with caution” if there are any “speculative movements” in the foreign-exchange market.

“I am not saying that we will do this or that in an active manner,” he said, “I am saying that we will continue to hold great interest” in movements in the market.

Japan, which increasingly finds its hands tied in trying to stoke an economic recovery, sees the exchange rate as the final tool at its disposal. The government has been trying to keep the currency weak to help the nation’s exporters.

Money base up 29.7%

Japan’s monetary base rose 29.7 percent from a year earlier to 86.82 trillion yen in May, marking the 16th straight month of expansion, the Bank of Japan said in a report released Tuesday.

The monetary base — cash in circulation plus money in current accounts held by banks at the central bank — increased 36.3 percent in April.

Growth in the monetary base has accelerated since March 2001, when the BOJ adopted a policy of “quantitative” monetary easing by pumping up the money supply to jump-start the faltering economy.

The fast pace of growth in the monetary base reflects the central bank’s aggressive move to inject funds into the banking system in an effort, so far futile, to beat back the prolonged deflationary trend.

The balance of banks’ current accounts at the BOJ jumped 208.6 percent in May to 15.66 trillion yen, the report shows. The balance rose 292.8 percent in April.

The BOJ has maintained the policy of flexibly providing funds regardless of its 10 trillion yen to 15 trillion yen target for current account deposits held at the BOJ by commercial banks.

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