Yen keeps distance from 1-month low after Kuroda disappointment

[TOKYO] The yen kept some distance from a one-month low against the US dollar on Tuesday after Bank of Japan Governor Haruhiko Kuroda held back from signalling further easing, acknowledging instead the costs of the BOJ's aggressive stimulus.

The US dollar is stabilising for now at around 103.45 yen, having fallen nearly a full yen from Friday's one-month high of 104.32.

Though Mr Kuroda signalled his readiness to expand an already massive stimulus programme in his speech on Monday, he did not provide any explicit hints on the chances of the BOJ aggressively easing policy at its next review on Sept 20-21.

In addition many analysts took note of the fact that Kuroda admitted for the first time that his stimulus has its costs, even he denied the view that the BOJ's stimulus is reaching its practical limit.

"For those who had been believing in a Kuroda who stresses only the benefits of easing, the speech would have been disappointing," said Makoto Noji, senior strategist at SMBC Nikko Securities.

"To be sure, he is unlikely to change his policy framework given that he was preaching the benefit of stimulus. Yet many market players might have felt that the costs are likely to outweigh the benefits in the future," he added.

The yen also bounced back against the euro, which fell to 115.42 yen from Friday's one-month high of 116.37 yen .

The common currency was little moved against the US dollar, staying at US$1.1147.

The British pound maintained its firm tone, following surprising resilience in recent UK economic data, trading at US$1.3305 in Asia after having hit a seven-week high of US$1.3376 on Monday.

The Australian dollar held firm at US$0.7587, retaining its recovery trend from last week's one-month low of US$0.7490, ahead of a decision later in the day from the Australian central bank's policy meeting.

The Reserve Bank of Australia is expected to keep interest rates on hold at the meeting, the last to be chaired by long-standing governor Glenn Stevens before he retires this month.

"The Aussie could rise a bit if the RBA refrains from a rate cut as expected. But given many market players think its next rate cut will come in November at the earliest - after the next CPI data anyway - the impact may not be so large, mostly driven by algo-type trading," said Yukio Ishizuki, currency strategist at Daiwa Securities.

Ahead of the RBA's policy announcement at 2:30pm local time (0430 GMT), the Aussie is bracing for June quarter current account data at 11:30am (0130 GMT).

REUTERS