US dollar drops vs yen as BOJ's Kuroda plays down 'helicopter money'

[NEW YORK] The US dollar fell from a six-week high against the yen on Thursday after Bank of Japan chief Haruhiko Kuroda said the bank saw no need to stimulate the economy with "helicopter money."

Investors had been betting on an aggressive round of stimulus from next week's BOJ meeting. Mr Kuroda played down the idea of injecting cash directly to businesses and consumers during a BBC Radio 4 interview, leading to a yen surge as strong as 105.41 yen per US dollar.

The BBC later said its interview with Mr Kuroda had been conducted in mid-June, helping cool the yen's gains.

The US dollar gained further ground against the yen after stronger-than-expected US initial jobless claims and existing home sales data, before resuming losses.

Analysts said the move lower in the US dollar against the yen was likely based more on technical positioning and "steam being let out of the dollar's rally," than expectations that the BOJ is rethinking its bias to ease monetary policy.

"As the dust settles here I think we'll be left with the story of broad dollar strength," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.

"The yen's gains today I would call that more of a profit-taking, positioning move as opposed to any meaningful reversal in the overall trend."

The US dollar has risen more than 5 per cent against the yen in the last two weeks. It had touched a six-week high above 107 yen before Mr Kuroda's interview was broadcast on reports that a fiscal stimulus package from Tokyo might be as much as twice as large as previously suggested.

The US dollar was last down one per cent against the yen at 105.69 yen.

The euro was little changed against the US dollar, surrendering most of its gains from European Central Bank President Mario Draghi's comments that the bank would take time to reassess any changes in the economic outlook.

The ECB held off on any immediate further easing of monetary policy, as expected.

Aside from the yen, the biggest mover among major currencies was the New Zealand dollar, which fell 0.6 per cent to US$0.6986 against its US counterpart, having touched a six-week low of US$0.6949. It was the seventh straight session that the kiwi has turned lower.

The Reserve Bank of New Zealand used an unusual between-meeting update on policy to say further rate cuts are likely. That cemented expectations for easing at its Aug 11 meeting.

REUTERS