Japan trying to WEAKEN their currency.

Leave it to Japan to humbly weaken their economy. From NY Times:

TOKYO — Japan took steps on Wednesday to help its economy ride out a surge in the yen, which has battered the country’s export-led economy.

The government announced a $100 billion loan fund to spur Japanese spending on corporate acquisitions and resources overseas, according to a statement released by the Finance Ministry. The ministry also said it would step up monitoring of currency markets by asking financial institutions to report on positions held by their currency dealers.

“Taking into account that there is a lopsided rise in the yen, I felt that swift measures were needed,” Yoshihiko Noda, the finance minister, told reporters.

But the action had little immediate effect on the yen and could underscore just how difficult it might be for the government to sway the huge foreign exchange market. A strong yen hurts Japanese exporters because it makes their goods less competitive and erodes the value of their overseas earnings when repatriated into yen.

Under the loan program, the government will send foreign currency reserves to the Japan Bank for International Cooperation, which will then make loans to commercial banks so they can help companies with overseas investments. By spending yen for dollars and other currencies, the ministry hopes that the currency will weaken somewhat.

The yen was little changed, with the dollar trading at 76.96 yen late in New York, up slightly from 76.64.

The second part of the government’s action is an effort to curtail speculation that officials think might be contributing to moves in the yen. Mr. Noda has indicated recently that the government will act against speculators seeking short-term profits.

The Bank of Japan issued a statement in support of the measures.

“The Bank of Japan will continue to carefully monitor the effects of developments in the foreign exchange market on the future course of economic activity and prices,” it said.

The government’s announcement came hours after Moody’s Investors Service, the credit ratings agency, lowered Japan’s credit rating, warning that frequent changes in administration, weak prospects for economic growth and its recent natural and nuclear disasters have made it difficult for the government to pare down its huge debt.

Moody’s lowered Japan’s grade by one step to Aa3, the fourth-highest rating, the company said in a statement.

The downgrade brings Moody’s rating for Japan in line with that of Standard & Poor’s, which lowered the country’s grade by one notch to AA– in January, the fourth-highest on its scale. Moody’s had put Japan on review for a downgrade in May.