Japanese Prime Minister Junichiro Koizumi and visiting US President George W. Bush talked in Tokyo Friday evening about reconstruction of Iraq, the nuclear issue of the Democratic People's Republic of Korea (DPRK) and stronger yen.

"We had meaningful talks over Iraq and North Korea (DPRK) issues," Kyodo News quoted Koizumi as saying following the meeting at the State Guesthouse over dinner

Koizumi briefed Bush on Japan's financial contribution to the reconstruction in Iraq for which Bush expressed appreciation.

Japan's Chief Cabinet Secretary Yasuo Fukuda unveiled Wednesday a plan that Japan would provide US$1.5 billion in grants in 2004 for Iraqi reconstruction. Bush, who is campaigning for international financial aid and troops to ease US burden in Iraq, hailed the decision after the announcement.

Meanwhile, under a newly endorsed law, Japan is to send Self-Defense Forces personnel to Iraq at the end of this year and early next year, helping in humanitarian operations.

Japan has been a staunch supporter in US effort to pressure the DPRK to abandon its nuclear weapons programs. It is also seeking US support in solving the DPRK's abduction of Japanese in the late 1970s and the early 1980s. Bush offered to help in the meeting, according to Kyodo.

Koizumi described the talks as "very frank, meaningful and interesting ... fantastic," while Bush portrayed his Japanese counterpart as a "good friend and very strong leader," Kyodo said.

Both leaders agreed on the need for a strong dollar but remained apart over how to deal with exchange rates. Bush reiterated the market should determine the value of currencies, while Koizumi emphasized the need to take steps to stem volatility in exchange rates.

Speaking Tuesday at a group interview with Asian and Australian reporters, Bush said, "I'm for a strong dollar policy. We've had a strong dollar policy in this administration."

However, he indicated the Japanese government should not intervene in the foreign exchange market. "The way that currencies ought to be valued is based upon economic activity, a fiscal policy, monetary policy of their respective governments, the potential for growth, the potential for long-term viability of the economies," he said.

In a bid to curb soaring yen, Japan used a record 4.46 trillion yen (US$40.91 billion) in September to intervene in the currency market, bringing the total funds used for such operations from the beginning of the year to 13.48 trillion yen (US$123.66 billion), according to the Japanese Finance Ministry.

Chief Cabinet Secretary Yasuo Fukuda suggested Wednesday Japan might continue intervention measures.

Bush arrived in Tokyo in the afternoon on the first leg of his six-nation Asia-Pacific tour on the occasion of the annual economic leaders meeting of the Asia-Pacific Economic Cooperation forum slated for Monday and Tuesday in Bangkok.

The trip will also take him to the Philippines, Singapore, Indonesia and Australia.

Koizumi and Bush last met in Texas in May. Bush last visited Tokyo in February 2002.

Bush is scheduled to leave Japan Saturday morning.

(Xinhua News Agency October 18, 2003)