Japan to Retain Strong-Yen Loan Facility Even as Currency Slides

The Japanese government will make permanent a dollar-loan program set up in 2011 to help companies take advantage of a strong yen, as it aims to maintain a record wave of overseas mergers and acquisitions.

The Finance Ministry will abolish the facility’s 10 trillion yen ($105 billion) limit on lending, it said in a statement today. The program was established by the ministry in August 2011 for one year and extended last year,

“The foreign exchange situation has drastically changed, but assisting Japanese firms’ overseas business development is a key pillar” of the government’s growth strategy, Finance Minister Taro Aso told reporters today.

After hitting a record high in October 2011, the yen has weakened more than 16 percent against the dollar since mid- November as Prime Minister Shinzo Abe pushes for aggressive monetary policies to end deflation. Companies from Softbank Corp. to advertising agency Dentsu Inc. stand to reap higher earnings from abroad after taking part in the nation’s record $113 billion of overseas acquisitions last year.

The currency was 0.6 percent weaker at 95.43 as of 2:15 p.m. in Tokyo after reaching 95.45, the lowest since 2009.

The program will be renamed ‘The Lending Facility to Support Overseas Development’ from April 1, the ministry said. Loans can finance the building of factories overseas, as well as infrastructure projects, securing natural resource rights and other uses, the ministry said.

Managed by the state-run Japan Bank for International Cooperation, the program uses dollars from the country’s foreign-exchange reserves as well as JBIC’s own funds.

To contact the reporter on this story: Mayumi Otsuma in Tokyo at motsuma@bloomberg.net

To contact the editor responsible for this story: Paul Panckhurst at ppanckhurst@bloomberg.net

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