Forex

TOKYO - Japan's lower house of parliament has passed the government's proposal to nominate Bank of Japan (BoJ) deputy governor Toshiro Muto as the next central bank chief, official results showed Thursday.

The lower house, controlled by the ruling Liberal Democratic Party (LDP) and New Komeito coalition, passed by a majority vote the nomination of Muto as head of the central bank, house president Yohei Kono said.

The move came a day after the upper house, controlled by the main opposition Democratic Party of Japan, rejected the nomination of Muto as the successor to the incumbent governor Toshihiko Fukui, whose term ends on March 19.

The candidate must be approved by both houses of parliament.

Opposition lawmakers are concerned that the appointment of Muto, a former top bureaucrat at the finance ministry, might damage the central bank's independence.

The lower house also approved the nomination of Takatoshi Itoh, a professor at Tokyo University and a member of an economic and fiscal policy advisory panel to the prime minister, as the next BoJ deputy governor, as well as another candidate, former BoJ executive director Masaaki Shirakawa.

Yesterday, the upper house also voted down the nomination of Itoh as the new deputy governor, but accepted Shirakawa's nomination.

The vote today by the lower house means that the Diet has officially approved the nomination of Shirakawa as the new deputy governor.

Should the ruling and opposition parties fail to compromise on the appointment of the new governor, Shirakawa will serve as acting governor until the post is filled.

Prime Minister Yasuo Fukuda now has to decide whether to re-nominate Muto or find other candidates.

The Nikkei business daily reported earlier today, without citing sources, that the ruling LDP is seeking informal discussions with the main opposition Democratic Party of Japan in a bid to prevent a leadership vacuum at the BoJ.

The LDP is also considering potential talks with the DPJ at the secretary-general or party president level as a way to resolve the impasse, the report said.

(1 US dollar = 100.43 yen)