Yen falls on speculation of BoJ intervention

[TOKYO] The yen fell against the dollar on Friday, heading for its biggest weekly fall in over two months over expectations the Bank of Japan may soon expand its already massive monetary easing programme.

Speculation has been mounting that BoJ Governor Haruhiko Kuroda will be forced to unleash a fresh round of stimulus to boost the stalling economy and drive up inflation.

The BoJ took the unprecedented step of introducing negative interest rates in January, effectively charging banks to store their excess reserves in the BoJ's vaults.

But the move failed to tame the strengthening yen, which hit a 17-month high against the dollar this month, drawing pledges of action from Finance Minister Taro Aso and other officials.

"The yen will weaken because we think the BoJ will end up delivering a package of measures which the stock market will like," Ray Attrill, co-head of currency strategy at National Australia Bank, told Bloomberg News.

"Probably the yen will weaken as a result of that." The dollar climbed to 109.63 yen, up from 109.34 yen in New York. The euro hovered around US$1.1261 and 123.44 yen, little changed from US$1.1269 and 123.22 yen in New York.

A higher yen harms Japanese exporters by raising prices of their products in overseas markets and by reducing the value of their foreign earnings when repatriated.

The Japanese currency has fallen 1.5 per cent this week, its steepest slide since the five days ended January 29 - when the BoJ announced its negative rate strategy - Bloomberg said.

Some economists believe BoJ chief Haruhiko Kuroda will expand his easing program at an April 27-28 meeting, when the central bank is expected to cut its outlook for inflation and growth.

On Thursday, Mr Aso reiterated his concerns about the "one-sided" gains in the yen to US Treasury Secretary Jacob Lew on the sidelines of a G20 conference.

"I conveyed our strong concerns about one-sided movements that have been seen in the foreign exchange market," Mr Aso told Japanese reporters.

AFP