THE Hong Kong Monetary Authority says it will act on behalf of the Bank of Japan in local trading of the yen against the dollar. Similar arrangements were announced between the Japanese central banking authorities and Singapore's monetary authorities in a move seen as a plan to boost the dollar by buying US currency. Tokyo's Ministry of Finance said it was holding discussions with other Asia-Pacific Economic Co-operation (Apec) members to form similar foreign exchange stability packages. The announcement yesterday caused the greenback to rally to more than 106 yen after falling earlier to a one-month low against the Japanese currency. The package, which was agreed last Friday when deputy finance ministers from Apec were meeting in Kyoto, allows the territory and Singapore to intervene secretly when the Ministry of Finance and Tokyo's central bank want to stabilise the yen against the greenback. Monetary authority spokesman Albert Chan said the agreement would allow for closer co-operation with Tokyo's monetary authorities as it was the first such deal signed with Japan. It was the latest in a series of currency stabilisation deals reached among central banks in the region, but the first to which Japan had been a party. The monetary authority earlier this month signed a bilateral repurchase (repo) agreement with the People's Bank of China - the sixth such agreement with a central bank in the region. It had signed repo agreements for US dollar government securities with the central banks of the Philippines, Australia, Indonesia, Malaysia and Thailand. Mr Chan said of the agreement with Japan: 'It will give us a closer working relationship with the Bank of Japan. 'We've signed different repo agreements with countries like Malaysia, the Philippines and China, but we haven't signed anything with Japan. 'They've chosen us for a reason, as we're the fifth-largest foreign exchange trading centre, and if they can intervene through us they can have more effective control of their currency.' Hong Kong has a daily foreign exchange turnover of more than US$91 billion. Mr Chan said the authority's intervention - which would not be made public - would be limited to just a handful of occasions a year. 'It's quite simple, really. When they want to intervene in the market they would give us their expected range and tell us how much to inject,' he said. 'They can do it through commercial banks, but that way everybody would know about it. 'This way . . . it is kind of confidential.' Mr Chan declined to reveal the commissions that Hong Kong would receive but said they would be worked out on a case-by-case basis. The Bank of Japan said yesterday the agreements with Hong Kong and Singapore were 'essential to promote co-operation among monetary authorities to enhance exchange market stability'. 'In view of rapid development of Asian and Oceanian financial markets, co-operation among Asian and Oceanian monetary authorities in the market is increasingly important,' it said. 'The authorities of Australia, Hong Kong, Singapore and Japan believe that these arrangements will contribute to exchange market stability, and will continue to co-operate closely in the market.' A senior Finance Ministry official said in Tokyo that Japan was negotiating similar arrangements with China and other Apec members. He declined to say whether or not this was a sign that Japan would move towards Asian repurchase pacts, which it had so far been wary of signing.