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The Bank of Japan may want to consider buying foreign currency assets to help ease the yen’s appreciation, economic and fiscal policy minister Banri Kaieda said.

“Such purchases can be an option for the central bank over the medium to long term,” Kaieda said in an interview in Tokyo on Friday. “They would be effective” in curbing the Japanese currency’s gains, he said.

Kaieda’s remarks come as policymakers struggle to stop the yen’s advance and lift the country out of deflation using fiscal and monetary policy steps. The yen appreciated this month to its strongest level against the dollar since 1995, threatening the export-dependent recovery, even after the BOJ loosened credit.

Foreign asset purchases may support demand for the dollar and other currencies and help to weaken the relative strength of the yen, which has gained more than 5 percent since Japan stepped into the currency market for the first time in six years on Sept. 15.

At the same time, any purchases of foreign assets mustn’t erode the health of the central bank’s balance sheet, Kaieda said. The BOJ on Oct. 5 created a ¥5 trillion fund to buy assets, including government and corporate bonds and exchange-traded funds, and pledged to keep rates near zero until deflation can be beaten.

Japan’s currency strengthened to a new 15-year high of ¥80.41 against the dollar Monday.

“If the BOJ embarks on aggressive policies, its action will be accompanied by risks,” Kaieda said. “It’s necessary to discuss how the bank can contain those risks” and avert the erosion of trust in the institution.

Debt buying by the central bank shouldn’t be seen as an alternative to currency intervention, the economy minister said. The Finance Ministry oversees currency policy, while the BOJ is in charge of price stability.

“We shouldn’t casually jump on the measure” of buying foreign debt instead of intervening in the currency market to curb the yen’s appreciation, he said.

Kaieda said he welcomes the BOJ’s latest decision to increase asset purchases because the bank is “reversing its previous stance that there is little it can do with interest rates lowered near zero.”

“We appreciate that the BOJ is meeting the government’s expectations with the various measures,” Kaieda said, while adding that he has “questions” about whether the fund is large enough.

BOJ Gov. Masaaki Shirakawa said this month the central bank may expand the fund if necessary to explore more monetary easing measures.

Kaieda also said the government would be able to conclude that deflation has ended should consumer prices achieve stable gains, which he views as continuous price increases for at least a quarter or two.

Given that a stronger yen makes imports cheaper and depresses prices, ending deflation may be delayed beyond the fiscal year starting next April, he said. The government had said in June it wanted prices to increase in that year.

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