Yen Slumps As Japan Launches Stimulus

Japan’s currency fell Tuesday, struggling at four-year lows against the U.S. dollar as it extended its dive in the wake of fresh Japanese monetary stimulus.

The U.S. dollar  bought 99.40 yen in Asian trade, compared with ¥99.21 in North American trade late Monday.

As the greenback toyed with the ¥100 level, Japan’s Finance Minister Taro Aso hinted Tuesday that policy makers are unlikely to seek to slow the pace of the yen’s decline. Aso said the yen was correcting after a period of excessive strength.

The dollar briefly pared its gain against the yen after Aso’s remarks, but soon resumed its climb.

The yen on Monday marked its lowest level against the dollar since April 2009 after the Bank of Japan made its first government bond purchases since announcing last week that it would add some $1.4 trillion to the economy over the next two years as it seeks to curb deflation.

The dollar had been trading around ¥92.89 just before the central bank outlined the program.

Analysts said Japan’s bond-buying operation went smoothly Monday. The central bank last week said it would increase the amount of its longer-term holdings of Japanese government bonds from ¥89 trillion ($900 billion) at the end of December to ¥190 trillion in two years’ time.

The euro  also rose against the yen Tuesday, fetching ¥129.73, up from Monday’s level of ¥129.01 and nearing its own psychologically important handle of ¥130.

In other currency moves Tuesday, the Australian dollar  rose against the dollar after Chinese consumer inflation data for March came in below expectations, while wholesale prices fell.

The Aussie rose to $1.0446, up from $1.0427 just ahead of the Chinese data and above its $1.0406 level late Monday. China is Australia’s largest trading partner, making the Aussie sensitive to Chinese economic indicators.

China’s consumer price index rose 2.1% from a year earlier, compared with the 2.4% rise projected in a Dow Jones Newswires survey. The result was significantly lower than February’s rise of 3.2%, but was still above January’s 2% inflation rate.

In other currency moves, the euro  advanced against the dollar, trading at $1.3056, up from $1.3004 late Monday, and the British pound  rose to $1.5267, up from $1.5248.

The ICE dollar index , which measures the greenback against a basket of six major rivals, eased to 82.541 from 82.752.

The WSJ Dollar Index , which uses a slightly larger comparison basket, rose to 73.78 from 73.76 on Monday.

Marketwatch