HIGHLIGHTS-Japan Democrats quotes on forex, bonds

(For more on Japan's election click [ID:nPOLJP])

Aug 31 (Reuters) - Japan's main opposition Democratic Party, which won a historic victory in an election on Sunday, has promised to pry control of policies from bureaucrats to cut waste and reorient public spending to benefit households.

Financial markets are keen to know more about their economic and financial policies including fiscal and currency management.

Below are recent comments by leading Democratic Party members on areas of economic and financial policy.

ON YEN EXCHANGE RATE AND FOREX INTERVENTION

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KATSUYA OKADA, SECRETARY-GENERAL, Aug. 10:

"What to do with currencies should be left to a new government. But I think trying to move currency rates artificially when they are in line with economic fundamentals would be undesirable in the long run."

KOHEI OTSUKA, A VICE FINANCE SPOKESMAN, Aug. 7:

"If Japan wants exports to be a driving force for its GDP, a weak yen is desirable. But if it places more emphasis on personal consumption, a strong yen would be desirable as it boosts purchasing power.

"But specific currency levels shouldn't be determined only by such factors. We would deal with currency policy by paying heed to market stability, while watching economic and market conditions."

HIROHISA FUJII, TOP ADVISER AND FORMER FINANCE MINISTER, July 16:

"Currency rates should not be moved artificially as they reflect the economy's strength. If Japan's economy is strong so is the yen, and if it's weaker than the U.S. economy the dollar will strengthen. It's quite natural.

"Unless currency moves are abnormal I don't think we should intervene in currency markets."

MASAHARU NAKAGAWA, FINANCE SPOKESMAN, June 10:

Has said currency rates should be left to market players to decide but intervention is appropriate when rates fluctuate rapidly out of line with economic fundamentals.

"It is possible that more firms could find it difficult to remain profitable by producing goods in Japan ... From what I hear from the private sector the dollar at 100 yen is the borderline."

Has also said the government could consider other methods to curb the yen's rise besides intervening, such as asking other countries to issue yen-denominated bonds or providing official development assistance in yen which could prompt those countries to sell the yen to convert to their own currency.

ON FOREIGN RESERVES MANAGEMENT

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YUKIO HATOYAMA, PARTY LEADER, Aug. 4:

"With regards to U.S. Treasuries, that's something we need to be careful over. We will judge it carefully after taking power."

TSUTOMU OKUBO, DEPUTY SPOKESMAN ON FINANCE, July 8:

Has said keeping the dollar as the world's main reserve currency is in Japan's interest.

"There's no reason we should limit dollar investment in the forex reserves to U.S. Treasuries.

"We should study various ways, such as taking credit risks or channelling some of the money to industry."

Okubo said any tweaks in reserve management should avoid moving markets: "For Japan to say it will sell U.S. Treasuries is like shooting yourself in the foot."

FUJII, July 16:

Has said the Democratic Party sees no need to alter holdings in forex reserves.

"It is a fact that confidence in the dollar is still high and it is quite natural for Japan to manage its reserves with what is trusted most (by the markets).

"The weighting of the dollar in the reserves is one such issue that should not be changed just because a change of government happens."

NAKAGAWA, June 10:

"I think there should be discussions on a key international currency in the mid-term."

He also said Japan should consider suggesting the U.S. issues yen-denominated bonds if Washington asks Tokyo to buy more U.S. government debt, but has also said in the past this did not mean Tokyo should stop buying dollar-denominated U.S. bonds.

ON MONETARY POLICY

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OKUBO, July 8:

"It is a consensus in the party that politics should not meddle in monetary policy."

TETSURO FUKUYAMA, DEPUTY POLICY CHIEF, July 15:

"We will preserve the independence of the central bank."

NAOKI MINEZAKI, ACTING HEAD OF PARTY'S TAX COUNCIL, June 11:

"The BOJ's policy has become a servant of fiscal policy. There are signs deflation is becoming serious but when we need to normalise financial conditions we need to raise rates more."

NAKAGAWA, June 10:

"The BOJ is shackled by Japan's poor fiscal conditions."

(On the BOJ's buying of JGBs) "It affects confidence in the central bank. It is up to the BOJ to decide."

ON BOND ISSUANCE AND BOND BUYING

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HATOYAMA, Aug. 23:

Vowed not to increase government debt issuance in the new fiscal year that starts on April 1 next year.

"If we were to increase debt any more, the country wouldn't hold out. We must make efforts to reduce it.

"We can't be pleased about a return to growth by such a degree ... I don't think the economy will improve this way."

OTSUKA, Aug. 7:

"There may be some room for the BOJ to help government finance, but we would not ask it to monetise government debt in advance."

"The finance authority should not press the BOJ to do so."

MASAYUKI NAOSHIMA, POLICY CHIEF, July 27:

"We would do our utmost not to issue deficit-covering bonds."

But he added: "There's also a view that the economy could go into decline. In that case, we would have no choice but to consider taking steps to shore up the economy as an emergency measure and it's possible we may have to issue deficit-covering bonds."

FUJII, July 16:

"It is important to cut more than 10 percent of new government bond issuance. This is important for both Japan's fiscal health and JGB markets."

ON EAST ASIAN CURRENCY

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HATOYAMA, Aug. 10 magazine article:

"... as an extension of the high economic development led by Japan, followed by South Korea, Taiwan and Hong Kong, and also realised by ASEAN and China, it is necessary to set a target to realise a 'common Asian currency' and to unify currencies regionally, and to work hard to create a permanent security framework in East Asia, which would serve as a backbone to that."

"It will take more than 10 years to realize the common Asian currency. And for that to bring political unity, it will probably require more time." (Reporting by Tokyo Bureau; Compiled by Charlotte Cooper and Linda Sieg; Editing by Rodney Joyce)