TOKYO: Japan's Prime Minister Yukio Hatoyama on Friday made a rare call for "firm steps" to stem the strength of the yen as the currency's recent advances have hit exporters' earnings.

Hatoyama told a parliamentary session that the yen's current high value gave a misleading impression of the world's second-largest economy, saying: "Japan's economy and industries aren't necessarily strong."

"I think we need to take firm steps against such yen strength," he said, adding that there is a need to "politically cooperate on the world stage."

His comments appeared to mark a change from his position in January when he said the government in principle should not discuss foreign exchange, which had contradicted calls by Finance Minister Naoto Kan for possible intervention.

The yen surged to 14-year highs against the greenback in November, hitting 86.28 to the dollar at one point. A strong yen hurts the competitiveness of Japanese exporters and erodes their overseas earnings when they are repatriated.

Since the start of the year the yen has traded around the 90-yen level against the dollar and about 130 yen to the euro.

The currency's strength has hampered Japan's struggle to recover from its worst post-war recession, which has forced companies to slash jobs and cut spending.

With borrowing rates at 0.1 percent -- the lowest among industrialised nations -- speculators are borrowing the yen to invest in higher-yielding units such as the Australian and Canadian dollars, which are seen as growth-sensitive.

The practice, known as "carry trade" has pushed the yen higher, posing a headache for many exporters such as electronics giant Sony or Toyota Motor, which lose billions of dollars for each one-yen rise.

Japan has not intervened on foreign exchange markets since March 2004, allowing the yen to find its own level. The finance ministry can intervene by ordering the Bank of Japan to carry out monetary operations.

Hatoyama's comments came as the government is pressuring the BoJ to take stronger action to boost the economy and tackle a deflationary trend that also plagued Japan after its economic bubble burst in the early 1990s.

BoJ Governor Masaaki Shirakawa told lawmakers Friday the bank is "trying to stimulate demand by keeping low interest rates", Dow Jones Newswires said.

His comment came amid speculation the bank will take fresh steps to ease credit when it opens its two-day monetary policy meeting on March 16.

The Nikkei business daily reported Friday that the bank aims to double its cash injections into markets to 20 trillion yen (220 billion dollars) and extend a loan facility programme that it had launched in December.

Last week the daily reported that the BoJ was considering a 10 trillion yen injection. By flooding financial markets with cash, the bank can keep short-term lending rates low in a bid to attract new borrowers.

Japan plunged into a year-long recession in 2008 due to the global downturn but it returned to growth in the second quarter of 2009, although the recovery has been hobbled by falling consumer prices and weak domestic demand.