Friday, March 12, 2010

Yen Falls on Speculation BOJ to Take More Credit-Easing Steps

March 12 (Bloomberg) -- The yen fell for a third day against the euro on speculation the Bank of Japan will take further steps to add funds into its financial system as the world’s second-largest economy struggles with deflation.

The euro headed for a weekly gain versus the dollar as signs Greece’s deficit crisis has been contained increased demand for the 16-nation currency. The yen also declined against 15 of its 16 major counterparts as U.S. stock gains damped demand for the Japanese currency as a refuge.

“Expectations remain strong especially among foreign investors that the BOJ will do more easing,” said Daisaku Ueno, president in Tokyo at Gaitame.Com Research Institute Ltd., a unit of Japan’s largest currency margin company. “Some foreign investors seem to be using the expectations in order to make yen-sell positions.”

The yen dropped to 124.09 per euro as of 8:32 a.m. in Tokyo from 123.82 in New York yesterday after earlier falling to 124.15, the weakest level since Feb. 23. Japan’s currency traded at 90.69 per dollar from 90.51. The euro was at $1.3678 from $1.3681, having strengthened 0.4 percent this week.

The yen headed for a second weekly decline versus the dollar as the Bank of Japan prepares to hold its next two-day policy meeting on March 16 and 17.

The central bank’s options include expanding a 10 trillion yen ($110 billion) fund providing loans to banks, according to two central bank officials who spoke on condition of anonymity.