Japan's inflation-linked bonds are poised for a second monthly fall as the stronger yen exacerbates deflationary pressure on an economy still reeling from the quake, tsunami and nuclear disasters.

Securities that reflect the outlook for consumer prices handed investors a 0.02 percent loss through Tuesday, an index compiled by Bank of America Merrill Lynch shows, set for the first two-month slide since November 2008 in the aftermath of Lehman Brothers Holdings Inc.'s collapse. By comparison, U.S. inflation-linked debt has increased 6.4 percent since the end of June, while Germany's has risen 3.3 percent.

The yen has recovered all losses against the dollar since Japan sold its currency Aug. 4 for the third time in a year, reapproaching a postwar record set in March. A gauge of price trends known as the deflator fell in the second quarter by the most in more than a year, data showed this week, adding to evidence the stronger currency is deepening deflationary pressures that have gripped the country for more than a decade.