Yen slips, investors brace for possible BOJ easing

By Masayuki Kitano

TOKYO (BestGrowthStock) – The yen slipped broadly on Monday as investors braced for possible monetary easing by the Bank of Japan to help curb the yen’s strength against the dollar.

The yen came under pressure after the BOJ called an emergency policy meeting, saying its nine-member board will meet from 0000 GMT. BOJ Governor Shirakawa will hold a news conference at 0530 GMT, the central bank added.

Sources familiar with the BOJ’s thinking have said the most likely easing option the BOJ may consider is to expand a cheap fixed-rate loan programme for banks, although any such move is already widely expected and may not weaken the yen for long.

The yen’s rise to a 15-year peak against the dollar last week slammed Tokyo shares and threatened to add to deflationary pressure on Japan’s economy, stirring market speculation about BOJ monetary easing as well as yen-selling intervention by Japanese authorities.

After the BOJ called an emergency policy meeting last December the dollar rose around 9 percent against the yen in about a month, and some traders may be looking for the dollar to rebound against the yen this time as well, said Tohru Sasaki, head of Japan rates and FX research at JPMorgan Chase Bank.

But since the biggest reasons behind the yen’s rise in the past few months are concerns about a slowdown in the U.S. economy and fiscal woes in the euro zone, the impact from any possible BOJ easing is likely to be limited, he said.

That is likely to hold true even if the BOJ were to take more aggressive steps such as increasing government bond purchases or cutting its overnight rate call target from the current 0.1 percent, Sasaki said.

“Such steps would be a surprise so the yen might weaken one yen more (against the dollar) than would otherwise be the case,” Sasaki said, but added that the overall impact was likely to be subdued.

The dollar hit an intraday high of 85.75 yen on trading platform EBS on news of the BOJ’s emergency meeting, rising from around 85.35 yen.

But it later trimmed some of its gains to stand at 85.59 yen, up 0.4 percent from late U.S. trading on Friday.

The dollar hit a 15-year low of 83.58 yen last week.

The euro rose 0.4 percent against the yen to 109.15 yen, having pulled up from a nine-year low of 105.44 yen struck last week.

Against the dollar, the euro dipped 0.1 percent to $1.2753.

(Editing by Edwina Gibbs)

Yen slips, investors brace for possible BOJ easing