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Yen Trades Near Four-Month Low Versus Euro on BOJ Stimulus Bets

The yen traded at 103.16 per euro as of 8:43 a.m. in Tokyo from 103.24 at the close yesterday, when it fell to 103.86, the weakest level since May 9. Photographer: Kiyoshi Ota/Bloomberg
The yen traded at 103.16 per euro as of 8:43 a.m. in Tokyo from 103.24 at the close yesterday, when it fell to 103.86, the weakest level since May 9. Photographer: Kiyoshi Ota/Bloomberg

Sept. 18 (Bloomberg) -- The yen traded near its lowest level in four months amid speculation that the Bank of Japan will expand monetary stimulus to rein in the currency’s strength.

The yen maintained a two-day slide versus the dollar that pushed it down to a one-week low as a territorial dispute between Japan and China escalated. Demand for the 17-nation euro was limited before data today forecast to show German investor confidence hovered near its lowest level this year.

“A lack of additional monetary easing could risk a stronger yen,” said Daisaku Ueno, a senior foreign-exchange and fixed-income strategist at Mitsubishi UFJ Morgan Stanley Securities Co. in Tokyo, a unit of Japan’s biggest listed bank. He says the Bank of Japan will probably increase its asset-purchase program by about 5 trillion yen ($64 billion).

The yen traded at 103.16 per euro as of 8:43 a.m. in Tokyo from 103.24 at the close yesterday, when it fell to 103.86, the weakest level since May 9. Japan’s currency was little changed at 78.72 per dollar, after yesterday touching 78.93, the lowest since Sept. 7. The euro fetched $1.3105 from $1.3117.

Five of 21 economists surveyed by Bloomberg News predict the BOJ will ease policy at a meeting ending tomorrow, with sixteen expecting a move by October.

The bank increased a fund to buy assets such as government debt by 5 trillion yen to 45 trillion yen in July, and has kept its target for overnight lending between zero and 0.1 percent since October 2010.

In Germany, the ZEW Center for European Economic Research is forecast to say its index of investor and analyst expectations, which aims to predict economic developments six months in advance, was at minus 20 in September, according to a Bloomberg News survey of economists. The gauge slid to minus 25.5 last month, the lowest this year.

-- Editors: Benjamin Purvis, Jonathan Annells

To contact the reporter on this story: Monami Yui in Tokyo at myui1@bloomberg.net; Masaki Kondo in Singapore at mkondo3@bloomberg.net

To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net

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