Bank of Japan Deputy Governor Hirohide Yamaguchi said on Wednesday the central bank has not guided monetary policy with a specific currency rate level in mind, and will not do so.

Yamaguchi, a career central banker whose views are thought to be close to those of Governor Masaaki Shirakawa, also said the central bank will continue to consider what more it can do to boost Japan's potential growth.

Below are key quotes from his speech to business leaders in Toyama, central Japan, and at a news conference that followed:

YEN RISE

(From news conference)

We are undoubtedly watching current exchange-rate moves carefully. Having said that, the BOJ has not and will not guide monetary policy with a specific currency level in mind.

I do understand currency markets have recently been moving towards yen strengthening, but when determining how such moves would affect Japan's economy we need to monitor not just the impact on underlying growth but the outlook for the economy ...

(Asked about market speculation that Japan will intervene in the currency market if the yen shoots up:)

It's not for me to comment on various views in the market on when and how currency intervention may happen. Currency markets fall under the jurisdiction of the government, so it depends on what the government decides ...

I won't deny that yen rises affect exports. But how much impact yen rises would have on business sentiment depends on the duration and pace of yen rises. Business sentiment changes depending on currency moves at the time.

We need some time before determining how current exchange-rate moves would affect the business mood and corporate activity ...

It's true the yen has strengthened in the past one to two months. But what's different now compared with during the Dubai shock last November is how companies see the state of the economy. Last November, many companies were not confident about the economy ...

Now, things have improved significantly ...

There has been a significant change in how companies that are heavily reliant on exports see currency moves. Such changes in developments and business sentiment need to be taken into account as a whole.

MEASURES ON GROWTH

(From speech)

Measures to support growth areas in Japan are not necessarily limited to our latest step ...

If market participants consider schemes such as securitising loans and investments that would relate to the strengthening of foundations for economic growth, the bank is willing to actively cooperate in establishing a market for such purposes.

Moreover, if such securitised products are to be nurtured, there will be room for exploring ways to accept those securitised products as eligible collateral for the bank's operations.

We will continue to give sufficient consideration while exploring various possibilities.

(From news conference, asked when he wants to consider new steps to boost Japan's potential growth:)

At this point I don't have a clear timetable in mind. But I feel strongly that steps to boost the economy's potential should be taken as soon as possible. As such, if there is any new step we can take I'd like to move at an early stage.

ECONOMY

(From speech)

Japan's economy bottomed out in the spring of 2009 and has been picking up, and we judge now that it shows further signs of a moderate recovery. The driving force for the recovery is an increase in exports and production.

There are some upside risks such as even faster growth in emerging and commodity-exporting economies. As for downside risks, international financial developments warrant attention.

In particular, attention should be paid to the effects of developments in fiscal and financial conditions in some European economies on international finance and the global economy.

Such upside and downside risks deviating from forecasts have become somewhat large in both directions compared with April.

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