Yen edges up, markets eye Bank of Japan stimulus

[TOKYO] The yen edged higher Friday even as the Bank of Japan's chief repeated a pledge that he was ready to unleash more stimulus measures to boost the sagging economy.

The remarks from Haruhiko Kuroda come after other officials have attempted to weaken the yen by threatening a market intervention, as a recent rally in the currency threatens Japan Inc's profits.

On Friday, Mr Kuroda said the central bank "doesn't have to wait" to launch more monetary easing - which would tend to weaken the yen - as it gauges the impact of a negative-rate policy announced earlier this year.

The new policy was widely criticised as a desperate bid to prop up Tokyo's faltering battle to kickstart Japan's economy.

"There is enough room for monetary easing," he said in a Tokyo speech, adding that the bank's goal to hit a two percent inflation target "hasn't changed".

Last month, the BOJ shocked markets by holding fire on fresh stimulus, as it pushed back a timeline for its ambitious inflation target - now expected before early 2018 rather than by September 2017.

"We're looking for further BOJ easing in July, but there's always the risk that they might move in June," Shinichiro Kadota, a foreign-exchange strategist at Barclays in Tokyo, told Bloomberg News.

"Those kind of policy expectations would support dollar-yen around the current levels of between 105 and 110," he said.

In Tokyo, the greenback was trading at 108.83 yen, slightly off 109.00 yen on Thursday in New York.

The euro slipped to 123.70 yen from 124.02 yen, and was flat at US$1.1374 against US$1.1377.

In US trading, the US dollar has jumped after two Federal Reserve officials laid out arguments for an early interest-rate increase.

Rate hikes are a plus for the US currency as they attract investors to dollar-denominated assets.

In other trading Friday, the South Korean won fell 0.6 per cent against the US dollar as the country's central bank kept record-low interest rates unchanged.

The British pound bought US$1.4439, slipping from US$1.4453 in US trading where it had edged higher despite a bearish economic outlook and a Bank of England warning over the negative consequences of a British exit from the European Union.

AFP