Japan will purchase euro zone bonds to bolster confidence in the European Financial Stability Facility as the euro zone struggles with a prolonged debt crisis, Japan's finance minister said on Tuesday, boosting the euro.
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Tokyo is considering buying about 20 percent of euro zone bonds to be jointly issued later this month to raise funds to support Ireland, using euros in its foreign reserves, Finance Minister Yoshihiko Noda told a news conference.
"I think it's appropriate for Japan to purchase a certain amount of bonds to boost confidence in the EFSF and make a contribution as a major country," he said.
China last week reaffirmed a commitment to buying Spanish bonds and last year offered to buy Greek bonds after Athens had to seek an international bailout.
Noda's comments came after Japan's top currency diplomat, Rintaro Tamaki, said on Monday that Tokyo could consider buying euro zone bonds to support the bloc as it struggles with a debt crisis.
Japan's foreign reserves, the world's second-biggest after China's, stood at $1.10 trillion at the end of December last year, after authorities spent 2.1249 trillion yen ($25.69 billion) on currency intervention in the month to Sept. 28, Ministry of Finance data showed on Tuesday.
The euro rose as far as $1.2992 [EUR=X 1.2941 
-0.0006 (-0.05%) 
] on trading platform EBS from around $1.2925 after Noda's comments, pulling further away from a four-month low hit on Monday, although it later moved back to $1.2961. Against the yen, the euro rose as high as 107.86 yen [EURJPY=X 107.46 
0.40 (+0.37%) ].
-0.0006 (-0.05%) ] on trading platform EBS from around $1.2925 after Noda's comments, pulling further away from a four-month low hit on Monday, although it later moved back to $1.2961. Against the yen, the euro rose as high as 107.86 yen [EURJPY=X 107.46 0.40 (+0.37%) ]. "I don't think these comments change the backdrop for the euro at all," said Todd Elmer, currency strategist for Citi in Singapore.
"Despite the fact that we're seeing this groundswell of international support, it doesn't really change or address the underlying problem and that's not going to change until the European authorities themselves come up with a more comprehensive solution to mitigate the fallout from the debt crisis."
