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Adviser to Japan PM says BOJ should consider buying foreign bonds

The Bank of Japan should consider buying foreign bonds as part of efforts to reflate the economy, an economic adviser to Japan Prime Minister Shinzo Abe told Reuters in a Feb. 22 interview.

"Under the BOJ law, the finance ministry holds jurisdiction over currency policy. But I hope [BOJ Governor Haruhiko] Kuroda would consider having the BOJ buy foreign bonds," Koichi Hamada, an emeritus professor of economics at Yale University, was quoted as saying.

Hamada added, according to the news outlet, that while the central bank cannot buy bonds to affect exchange rates, it could do so to deliver "proper monetary policy" for Japan.

The central bank has dismissed the suggestion thus far to avoid criticism that it may be an attempt to manipulate the yen, Reuters reported.

The government reappointed Kuroda on Feb. 16 for another term in a sign policymakers are in no rush to end the bank's stimulus program.

The announcement, however, did little to reverse the yen's recent rises against the dollar, giving Japanese policymakers more reasons to be worried of the impact of a strong yen on Japan's exports, according to the news outlet.