Even Japan has limits to what it will do in a currency war. The country's finance minister, Taro Aso, has confirmed  that the nation has no plans to buy foreign bonds through the Bank of Japan.
The denial is a slight walking-back of the words of the Prime Minister Shinzo Abe last night, who noted  — without saying what he actually thought on the subject — that "there are views calling for foreign-bond purchases".
Abe had been discussing the recently revised inflation mandate for the Bank of Japan in parliament when opposition MPs asked him what the bank is actually planning to do to back up its target. Without confirming any particular policy route, Abe named a number of potential unconventional measures, saying that "I hope the BoJ will take effective policy steps that would contribute to overcoming deflation."
The BoJ has every motivation to fight deflation; in the same debate, Abe threatened it with a change in law, saying:
It would be necessary to proceed with revising the BOJ law if the central bank cannot produce results under its own mandate.
While Abe has, for the most part, been content to let the Bank pick its own methods so long as it results in reflation, Aso's comments this morning imply there are limits. Bloomberg's Mayumi Otsuma puts the talking-back in context :
Economy Minister Akira Amari told reporters today that Abe’s comments referred to buying foreign bonds as a general policy idea that is available to any country.
It seems likely that the skittishness of the Japanese cabinet is related to the G20's stand on currency manipulation, which was finally clarified after last week's mild confusion . The group is definitely (maybe) against currency manipulation . And while much of what Japan is doing is clearly aimed at affecting the Yen in international markets, it's also capable of being viewed as simple unconventional monetary policy aimed at having a domestic effect. Buying foreign bonds would render that charade a lot harder to pull off, and could lead to some awkward conversations in Moscow this weekend.