BLBG:Yen Ends 2-Day Gain After BOJ Decision; N.Z. Dollar Rises
The yen halted a two-day advance as investors overlooked the Bank of Japan’s decision to keep its asset purchases unchanged and speculated the central bank will add stimulus next month as the nation’s economy slows.
The yen fell after former BOJ Deputy Governor Kazumasa Iwata, a potential candidate to become the next central bank head, signaled the currency has scope to depreciate further. Data showed today Japan’s gross domestic product unexpectedly shrank in the fourth quarter. New Zealand’s dollar, nicknamed the kiwi, rose for a third day after figures showed the nation’s manufacturing industry grew at the fastest pace since May.
“The market’s focus is shifting to the BOJ under the new governor,” said Yoshiko Takayasu, the Tokyo-based head of corporate sales for National Australia Bank Ltd. “There are expectations that the yen would weaken towards 100 per dollar amid hopes there will be further monetary stimulus.”
The yen lost 0.1 percent to 93.51 per dollar at 1:38 p.m. in Tokyo. It was little changed at 125.67 per euro, after strengthening 0.7 percent in the past two sessions. The euro bought $1.3439 from $1.3452. New Zealand’s dollar rose 0.2 percent to 84.74 U.S. cents.
The BOJ rejected a proposal for keeping interest rates virtually at zero until a price target is in sight and refrained from adding to stimulus, ahead of leadership changes next month.
Asset Buying
The central bank kept its asset purchase fund unchanged at 76 trillion yen ($813 billion), according to a BOJ statement released in Tokyo. That was in line with analysts’ forecasts. Policy makers rejected board member Ryuzo Miyao’s call for the pledge on rates. The BOJ last month doubled its inflation target to 2 percent and pledged open-ended bond buying.
Former BOJ official Iwata said the price goal can’t be reached without a correction in the strong yen. He said in a statement today that the yen at 90 to 100 per dollar marks a return to equilibrium. He is said to be a candidate to succeed Governor Masaaki Shirakawa after he steps down on March 19.
Japan’s currency has tumbled 17 percent in the past three months, the worst performer among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar declined 1.9 percent and the euro rose 4.3 percent.
To contact the reporters on this story: Mariko Ishikawa in Tokyo at mishikawa9@bloomberg.net; Monami Yui in Tokyo at myui1@bloomberg.net
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net
