Dollar continues to trample the yen after BOJ Easing

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The yen weakened against the U.S. dollar and euro in Asia trade Monday, as the market continued to feel the heat from the Bank of Japan’s move to adopt negative interest rates Friday. The dollar USDJPY, +0.14% rose as high as ¥121.49 yen before stabilizing at ¥121.24. The pair…

The yen weakened against the U.S. dollar and euro in Asia trade Monday, as the market continued to feel the heat from the Bank of Japan’s move to adopt negative interest rates Friday.

The dollar USDJPY, +0.14% rose as high as ¥121.49 yen before stabilizing at ¥121.24. The pair was at ¥121.04 late Friday in New York.

On Friday, the BOJ said it would impose a minus 0.1% interest rate on a portion of commercial banks’ yen deposits at the central bank, in the hopes it would encourage more lending.

“Fresh from Friday’s announcement, I think (the dollar’s) downside support (against the yen) will likely remain solid for some time to come,” said Marito Ueda, director at FX Prime byGMO.

“The method is qualitatively different from that in the past. In that sense, [it was] a surprise,” said Koichi Hamada, a professor emeritus at Yale University and a close adviser to Prime Minister Shinzo Abe.

But “we are merely seeing an announcement effect from the BOJ steps,” said Ueda, adding that doubts remain over whether the central bank’s action would jumpstart the economy, partly by sparking more bank lending to small and midsize Japanese companies.

In addition, many big Japanese firms are sitting on ample cash, but remain reluctant to use it to boost wages, he said.

The Japanese currency EURJPY, +0.56% was also weaker against the euro, which rose to ¥131.60 from ¥131.14 late Friday, while the U.K. pound GBPJPY, +0.45% gained to ¥173.05 from ¥172.52.

The risk-sensitive Australian dollar AUDJPY, -0.07% changed hands at ¥85.80 midday from ¥85.70, after China reported that the official manufacturing purchasing managers index fell to 49.4 in January, marking the lowest reading since August 2012.

The WSJ Dollar Index BUXX, -0.01% , a measure of the dollar against a basket of major currencies, was down 0.02% at 91.57.


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