Tuesday, March 13, 2012

Yen rises after Bank of Japan policy meeting

TOKYO: The yen rose against the dollar and euro in Asia on Tuesday after the Japanese central bank kept interest rates unchanged and signalled the economy may be "picking up".

As it wound up a two-day policy meeting, the Bank of Japan (BoJ) left its key interest rate unchanged at between zero and 0.1 percent, while boosting a loan programme by 2.0 trillion yen ($24.4 billion) to 5.5 trillion yen.

The move was designed to help kickstart the economy, and the bank also kept a 65-trillion-yen asset-purchasing scheme intact.

The yen was at 82.02 against the dollar and 107.94 against the euro after the central bank announcement, stronger than the 82.26 and 108.45 beforehand.

The Japanese unit traded at 82.32 to the dollar and 108.22 against the euro in New York late Monday.

Some market players predicted that the bank would expand its asset-purchase programme, said a senior dealer at a major Japanese trust bank.

But the dollar was quickly sold off after the bank left the purchasing scheme unchanged, the dealer told Dow Jones Newswires.

The bank said Japan's stagnant economy has "shown some signs of picking up" and added that it would "return to a moderate recovery path as the pace of recovery in overseas markets picks up".

The BoJ surprised the market in February by announcing it would expand the asset purchase programme in the latest push to combat stubborn deflation as domestic and global uncertainty intensifies.

The euro was stable against the dollar as worries over European debt temporarily receded after Greece won a second bailout and Spain was granted concessions in its bid to shrink its debt load.

The common European currency fetched $1.3157 in Tokyo afternoon trade against $1.3147 in New York.

Dealers were waiting for the outcome of a one-day policy meeting of the US Federal Reserve on Tuesday.

Rates hardly changed after Japanese Finance Minister Jun Azumi said earlier that Tokyo had won approval from Beijing to buy Chinese government bonds, amounting to $10.3 billion, for the first time.

The dollar was mostly lower against other Asian currencies.

It eased to S$1.2563 in Tokyo afternoon trade from S$1.2608 on Monday, to 42.58 Philippine pesos from 42.65, to 1,121.40 South Korean won from 1,122.50, to 30.59 Thai baht from 30.62 and to Tw$29.46 from Tw$29.50.

The dollar firmed to 9,170.00 Indonesian rupiah from 9,155.00.


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