Yen Falls on Speculation BOJ Will Expand Easing; Aussie Weakens

The yen fell against the dollar, snapping a two-day advance, amid speculation the Bank of Japan will expand stimulus when it meets next week.

The currency fell versus 14 of its 16 major peers after Economy Minister Akira Amari said his comments earlier this week that excessive weakening of the yen was harmful had been misinterpreted. It rallied in the past two days after comments by Japanese officials damped expectations the government will push for further declines. Australia’s dollar slid after data showed the nation lost jobs in December. Switzerland’s franc weakened as demand for the safest assets fell.

“The market is waiting to see what measures are introduced next week,” said Antje Praefcke, a senior currency strategist in Frankfurt at Commerzbank AG. “We think that they have to deliver at their meeting and that, as well as the comments from Amari are signs that yen is going to weaken.”

The yen slid 0.5 percent to 88.85 per dollar at 9:26 a.m. in London, after gaining 1.2 percent over the previous two days. It depreciated to 89.67 on Jan. 14, the weakest level since June 2010. Japan’s currency fell 0.9 percent to 118.48 per euro. The 17-nation common currency rose 0.4 percent to $1.3336. The Swiss franc declined as much as 0.7 percent to 1.2457 per euro, the weakest since October 2011.

The yen will depreciate to 95 per dollar in the next six months, Praefcke predicted. It last traded at that level in August 2009, according to data compiled by Bloomberg.

BOJ Meeting

BOJ Governor Masaaki Shirakawa, who’s due to step down in April, and his fellow board members will review the central bank’s inflation goal at their Jan. 21-22 meeting. Prime Minister Shinzo Abe has called for the target to be doubled to 2 percent and said on Jan. 13 that he wants a BOJ chief “who can push through bold monetary policy.”

The yen is still in the process of correcting from excessive gains, Amari told reporters today in Tokyo.

“The media didn’t report my full remarks and that caused a reaction in the markets,” Amari said, referring to a comment earlier this week that an excessively weak currency may drive up import costs and hurt households.

“Mostly foreigners sold the yen in reaction to the English headlines on Amari comments,” said Yuji Saito, the director of the foreign-exchange department in Tokyo at Credit Agricole SA.

Currency Indexes

The yen has tumbled 12 percent over the past three months, making it the worst performer among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar has added 0.2 percent and the euro has risen 1.9 percent.

Australia’s dollar declined against all its major counterparts today after data showed employment fell by 5,500 in December. That compared with economist estimates for a 4,000 increase.

“Domestically, the economy does not look that strong,” said Thomas Harr, the head of Asia local markets strategy at Standard Chartered Plc in Singapore. “In the very, very short term, there’s a risk to the downside for the Aussie.”

The Australian dollar weakened 0.5 percent to $1.0515.

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