WSJ:WORLD FOREX: Surprise BOJ Action Knocks Down Yen Vs Dlr, Euro
-- Bank of Japan takes market by surprise, unveiling fresh easing measures
-- Dollar rises to 3-week high against yen, euro also high versus Japanese counterpart
-- Euro suffers losses against dollar on Moody's cutting of 6 European nations' sovereign ratings
By Takashi Mochizuki
Of DOW JONES NEWSWIRES
TOKYO (Dow Jones)--Surprising easing action by the Bank of Japan sent the dollar to a three-week high against the yen in Asia on Tuesday, and traders said it will likely keep rising further for the time being.
The BOJ decided to expand its asset-buying program again by Y10 trillion to Y65 trillion and set a "price stability goal," abandoning its long-used "understanding of price stability" phrase.
Many analysts and investors had expected the central bank not to take any fresh measures at the policy-setting meeting, which ended earlier in the day.
"It was certainly a surprise," said Hirotsugu Inoue, a senior dealer at UBS.
It was not only the beefing up of the facility, but also the overall tone of the statement, that surprised market participants, traders said.
"The statement gives us the impression the BOJ has strengthened its pledge to keep monetary policy easy for the time being," said Mitsuru Sahara, a senior dealer at Bank of Tokyo-Mitsubishi UFJ.
The dollar rose to Y77.96, its highest level since Jan. 26 from Y77.59 before the announcement. As of 0450 GMT, it was at Y77.88 from Y77.57 in New York on Monday.
Tokyo traders said the greenback will keep rising further because European and U.S. investors are often more aggressive than Japanese investors in reacting to fresh BOJ measures.
The euro was also higher against the yen, trading at Y102.48 as of 0450 GMT from Y102.37 in New York on Monday. But against the greenback, it weakened to $1.3159 from $1.3187
Earlier in the Asian trading session Tuesday, Moody's Investors Service downgraded six European nations' sovereign ratings and lowered its outlook on the U.K. The move knocked down the common currency.
Investors' focus will now shift to a meeting of euro-zone finance ministers on Wednesday to see whether Greece will be able to smoothly secure fresh aid that is necessary to avoid a disorderly default, said Masafumi Yamamoto, chief currency strategist at Barclays Capital.
"Greece has such a long path ahead to avoid a disorderly default, and there are many risk scenarios surrounding that path," he said.
The ICE Dollar Index, which tracks the U.S. dollar against a basket of currencies, was at 79.209 from 79.031.
Interbank Foreign Exchange Rates At 0050 EST / 0450 GMT
