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Divisions are appearing in the ruling Democratic Party of Japan over the proposal for the central bank to purchase foreign currency bonds a week before policymakers meet to assess whether to apply more stimulus.

DPJ policy chief Seiji Maehara told reporters Thursday in Tokyo that it would be “desirable” for the government and the Bank of Japan to reach an agreement allowing the central bank to buy foreign securities. Earlier this week, however, Finance Minister Jun Azumi told lawmakers that purchases akin to intervention in the foreign currency market would be inappropriate.

The comments indicate debate on the proposal is growing within the ruling party, just months after former BOJ Deputy Gov. Kazumasa Iwata advocated a ¥50 trillion initiative to combat the yen’s gains through the acquisition of foreign debt. The Finance Ministry is in charge of currency intervention moves, and BOJ stimulus moves focus on purchases of Japanese government bonds.

“Political calls on the BOJ to help curb the yen’s strength are gaining momentum,” said Chotaro Morita, a fixed income strategist at Barclays PLC in Tokyo. Ministry and BOJ officials oppose the overseas bond proposal, suggesting the central bank will use other stimulus methods if it deems it necessary to respond to “mounting political pressure,” Morita said.

The central bank will convene Wednesday and Thursday to decide its next policy steps.

Takehiro Sato, a former economist at Morgan Stanley who joined the BOJ Policy Board last month, said July 24 that buying foreign bonds is one option. A fellow newcomer to the board, Takahide Kiuchi, said the same day the bank may need to consider “new forms of monetary easing.”

“Global economic indicators from almost all key trading partner regions are pressuring Japan for more policy action,” Morgan Stanley economists in Japan led by Robert Feldman wrote in a research note this week. “Monetary debate has perked up, thanks to the new monetary policy committee members.”

The strength of the yen is adding to manufacturers’ woes. Sharp Corp. said Thursday it will eliminate 5,000 jobs after widening its annual loss forecast on slumping demand for televisions. Sony Corp. and Panasonic Corp. are also planning to shed workers following record losses.

Ex-Deputy Gov. Iwata, currently president of the Japan Center for Economic Research think tank, said in a Jan. 25 interview that even companies that have built up a tolerance to an appreciating currency over the years, such as Toyota Motor Corp., have been “screaming” about the sky-high yen’s effects on their bottom line.

The yen was trading at 78.24 to the dollar at around 8 p.m. in Tokyo on Thursday, a rise of almost 7 percent since mid-March.

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