TOKYO: The yen slid in Asia on Friday as speculation over more Bank of Japan (Bank of Japan) monetary easing gathers pace, while the dollar won support from growing confidence in the US economic recovery.
In Tokyo afternoon trading, the greenback jumped to 107.23 yen, from 107.11 yen in New York. The dollar last breached the 107-yen level in September 2008.
The euro also rose to 138.69 yen from 138.39 yen, while it was flat at $1.2921 against $1.2919 in the US.
In other trading, the British pound held above $1.62 ahead of a nail-biting referendum next week that could see Scotland break from the United Kingdom. The unit bought $1.6238 in Tokyo, again $1.6232 in New York City.
The yen’s slide followed a meeting between BoJ Governor Haruhiko Kuroda and Prime Minister Shinzo Abe on Thursday.
Japan’s top central banker said he would widen the central bank’s monetary base if necessary as it looks to achieve 2.0 percent inflation by next year — a key part of Tokyo’s bid to conquer the deflation that has weighed on Japan’s economy for years.
“If we face difficulty achieving that [inflation]goal, we would adjust monetary policy without hesitation, even if it takes the form of additional easing or anything else,” Kuroda told reporters in Tokyo after meeting with Abe.
But Kuroda appeared to roll back those comments on a live television program later in the day, saying that “there’s no need to discuss additional easing for now since prices are on a steady track to achieving the 2.0 percent inflation target.”
The central bank last week held off further stimulus despite a sharp contraction in the economy between April and June largely owing to a sales tax hike, in turn boosting expectations that the BoJ will act at its October meeting.
“We still do not expect the BoJ to ease any time soon, especially after the strong increase in wages in July,” said Nomura Securities research analyst Yujiro Goto.
“Nonetheless, market expectations for the BoJ may change rapidly over the next few months, which may lead to greater volatility of [the dollar-yen rate],” the analyst said.
Dollar demand from Japanese importers ahead of a three-day weekend was also moving currency markets, as investors await US retail sales data later on Friday for further confirmation of a recovery in the world’s number one economy.
The dollar was mixed against other Asia-Pacific currencies.
It edged up to 1,036.40 South Korean won from 1,036.00 won, to Tw$30.00 from Tw$29.99, to Sg$1.2639 from Sg$1.2632, to 32.17 Thai baht from 32.12 baht, and to P43.97 (Philippine pesos) from P43.91.
It eased to 60.86 Indian rupees from 60.88 rupees and to 11,815.00 Indonesian rupiah from 11,838.00 rupiah.
The Australian dollar bought 90.55 US cents against 91.66 US cents.
The Chinese yuan rose to 17.48 yen from 17.44 yen.