TOKYO: The yen held steady in Asia on Monday as Japan’s top central banker moved to temper speculation it will unveil more monetary stimulus when it meets this week.
A report in the leading Nikkei business daily on Friday raised hopes the Bank of Japan would widen its already vast easing program to counter weakness in the world’s number three economy.
The report, which came a day after the head of the European Central Bank had pledged more action, helped send global markets rallying and pushed the yen lower against the dollar and euro.
But in a weekend interview with Bloomberg in Davos, Switzerland, BoJ governor Haruhiko Kuroda showed little sign the bank would announce immediate easing measures, although he said it was ready to act “if the underlying inflation trend is seriously affected.”
Last month, policymakers announced an unexpected tweak to the BoJ’s vast stimulus program but refused to expand the 80 trillion yen annual asset-buying scheme—which effectively prints money to spur lending.
In midday trade, the dollar edged down to 118.67 yen from 118.76 yen in New York—but it is still well up from the 117.66 yen on Thursday, before the Nikkei report. The euro rose to 128.35 yen from 128.23 yen and is also much higher than the 127.99 yen Thursday.
The single currency ticked up to $1.0813 from $1.0797 in New York.
Japan’s December inflation and other key indicators are due Friday as the central bank wraps up its first meeting of the year.
Global financial markets went into a freefall at the start of the year, hammered by fears about the global economy, especially China, and a crash in oil prices.
The fear factor has benefited the yen, which investors tend to buy as a safe haven in times of turmoil and uncertainty.
More BoJ easing measures would tend to weaken the unit.
“The BoJ meets Friday with its decision due hot on the heels of the latest (December inflation), retail sales and industrial production data,” National Australia Bank said in a commentary.
“On balance we expect no change” to the current easing program, but “we can’t completely rule out a ‘surprise’ easing.”
“A likely downgrade to inflation projections will have some suggesting the BoJ is limbering up for a possible change a little later in the year,” it added.
In other trading, the Thai baht, Singapore dollar, South Korean won and Indian rupee edged up against the dollar, in line with a broad advance on equity markets that extended the rally at the end of last week.
The oil-linked Malaysian ringgit also soared, adding almost one percent thanks to a sharp bounce in crude prices.