Japan trade ministry sees dlr/yen at 85 "abnormal"

TOKYO (Reuters) - Japanese monetary authorities should take all possible measures to curb the yen's rise as current levels around 85 to the dollar are "abnormal," a senior trade ministry official said.

Yosuke Kondo, parliamentary secretary for the Ministry of Economy, Trade and Industry, also said the Bank of Japan needs to do more to boost fund supplies and should not hesitate to expand its balance sheet.

"I think the yen's current level around 85 (to the dollar) is abnormal and hugely affects corporate profits," Kondo told Reuters in an interview on Friday.

Asked whether Japan should intervene in the currency market in the event of a sharp rise in the yen, Kondo said: "The government has already expressed its determination to take all necessary measures. There's nothing more and nothing less."

But Kondo suggested doubts about solo currency market intervention by Tokyo, stating that ineffective intervention would be of no use for Japanese corporations.

Japanese policymakers have tried to talk down the yen since it rose to a 15-year high against the dollar last week and threatened to step into the market if sharp yen gains persist.

The BOJ also eased monetary policy by expanding a fund supply tool at an emergency meeting on Monday, bowing to government pressure for fresh action to ease the pain from the yen's gains.

Kondo, a senior lawmaker working under trade minister Masayuki Naoshima, said he hoped the BOJ would examine further monetary easing steps to alleviate the damage from a strong yen to corporate earnings.

The trade ministry does not have direct control over exchange-rate policy, which falls under the jurisdiction of the finance ministry, but has close ties with the business sector.

Kondo is mainly in charge of representing the ministry's views in the development of the government's growth strategy.

A survey by the ministry showed two-thirds of Japanese companies expect the yen's strength to squeeze profits and 40 percent will shift production overseas if the currency remains at present levels.

The BOJ is expected to hold off on easing monetary policy next week but is gearing up for further action in October as the strong yen threatens to derail its forecast of a moderate economic recovery, sources said.

(Editing by Edmund Klamann)