Yen tumbles After BOJ Monetary Easing

The yen fell against all its most- traded counterparts after the Bank of Japan said it would increase the size of its asset-purchase fund.

Japan’s currency fell to a six-month low versus the dollar in its biggest weekly loss against the dollar since November as better-than-expected economic data damped expectations of further monetary easing in the U.S. The euro fell versus the dollar after Moody’s downgraded the debt ratings of six European nations and said more may follow. Euro-area finance ministers meet Feb. 20 meeting to decide the fate of a Greek financial bailout.

“You have the policy easing in Japan, which is pushing the yen lower,” said Omer Esiner, chief market analyst in Washington at Commonwealth Foreign Exchange Inc., a currency brokerage. “There are some structural issues in Japan we’re keeping an eye on that the long-time pillars of yen strength are starting to deteriorate.”

The yen fell 2.5 percent to 79.55 versus the dollar, the biggest weekly loss since Nov. 4. It touched 79.62 the weakest since Aug. 4. The Japanese currency declined 2.1 percent to 104.54 against the euro. On Feb. 17, it reached 104.67, the weakest since Dec. 5. The euro fell 0.4 percent to $1.3140 after touching $1.2974, the lowest since Jan. 25.

Japan’s central bank increased its asset-purchase fund to 30 trillion yen, expanding economic stimulus measures for the first time since October. The BOJ also said it will target 1% inflation “for the time being.”

The dollar was supported against the yen as the New York- based Conference Board’s gauge of the U.S. outlook for the next three to six months increased, manufacturing in the Philadelphia area expanded by the fastest in four months and initial jobless claims fell to the lowest in four years.

The yen has tumbled 6.5 percent over the past month and the dollar dropped 3.2 percent, the worst performers among 10 developed-market currencies. The euro gained 0.6 percent over the period.

Japan’s Finance Minister Jun Azumi reiterated at a parliamentary budget committee session in Tokyo on Feb. 13 that he’ll act on excessive and speculative moves in the currency. Japan spent 14.3 trillion yen ($185 billion) in intervention operations last year to stem gains in the currency as it rose to postwar records against the dollar, hurting the nation’s exporters.

“The 10 trillion yen the Bank of Japan pumped in to the economy is still a fairly modest amount in the big scheme of things,” said Joe Manimbo, a market analyst in Washington at Western Union Business Solutions, a unit of Western Union Co. “The yen may have further room to the downside, particularly if the Fed holds off from embarking on a third round of monetary easing this year.”

Source: News Agencies