Kan, Shirakawa discuss economic issues but not currency intervention+

TOKYO, Aug. 23 Kyodo - Prime Minister Naoto Kan and Bank of Japan Governor Masaaki Shirakawa held talks by phone on Monday to exchange views on recent economic and financial market developments as the yen's surge has added to concerns about the Japanese
economy, which has shown signs of slowdown.

But during the conversation, which lasted some 15 minutes, they did not discuss
a possible currency intervention by the Japanese authorities to stem the yen's
spike against the U.S. dollar and other major currencies, Chief Cabinet
Secretary Yoshito Sengoku said.
Kan declined to comment on whether he had asked the central bank to further
ease its monetary policy to boost the economy. The prime minister told
reporters that he and Shirakawa ''exchanged various opinions'' as the
government and the BOJ have done.
Sengoku said the two ''agreed it is extremely important for the government and
the BOJ to keep closely communicating with each other.'' He also said that the
government will consider holding a direct meeting between them in the near
future.
Asked about the possible intervention in the currency market, the government's
top spokesman said, ''I heard such an issue was never discussed in today's
talks.''
The yen's sharp rise has negatively affected the earnings of Japanese exporters.
Sengoku reiterated the government has been closely watching financial market
conditions but said, ''As for the euro, the dollar, or the yuan, we don't have
any material to comment on.''
The talks came as the government is preparing new fiscal stimulus measures to
boost the economy, which has been mired in falling prices, weak consumer and
corporate spending, and high unemployment. The BOJ, meanwhile, has been under
pressure from both ruling and opposition lawmakers to take additional easing
measures to support the country's economic recovery.
''Basically, they started their talks on the point of how they recognize and
understand for the moment recent developments in U.S. and European economic and
financial conditions,'' Sengoku said. But he declined to give details, saying,
''I think we should not reveal (everything) in consideration of (the influence
on) markets.''
The BOJ is scheduled to hold its monthly Policy Board meeting on Sept. 6 and 7.
The Democratic Party of Japan-led government and the BOJ have agreed to hold
meetings between the prime minister and the governor on a regular basis, about
every three months.
The Monday talks came against widespread expectations that they would meet at
the prime minister's office by the end of this week.
After the DPJ took power in last year's general election, then Prime Minister
Yukio Hatoyama met with Shirakawa in December and April. Kan, who assumed
office in June, held his first talks with the BOJ chief on June 21 and they
talked over the phone for the first time on Monday, according to the BOJ.
Sengoku said the government had judged it is ''the most appropriate'' so far to
hold phone talks instead of a face-to-face meeting by considering the current
economic and financial conditions.
==Kyodo