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Yen slips as Abe steps up pressure on BoJ

Dec 23 2012 21:47 AFP

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Singapore - The yen dipped against the dollar and euro in Asian trade on Monday as incoming Japanese premier Shinzo Abe stepped up pressure on the Bank of Japan to set a two percent inflation target.

The euro bought ¥111.23 in afternoon Christmas Eve trade from ¥110.05 in New York late on Friday, after Abe on Sunday threatened to revise a law guaranteeing the BoJ's independence if it did not back his proposed inflation goal.

The dollar fetched ¥84.38 from ¥84.25, while the single currency bought $1.3183 from $1.3181.

"The yen is finding sellers, even in thin holiday trade," said Jason Hughes, head of premium client management for IG Markets Singapore.

"The changes in political circles in Japan mean we will see a more aggressive stance in weakening" the yen, he said.

Abe is expected to take office on Wednesday, following a landslide victory for his Liberal Democratic Party in national elections last week.

The hawkish leader has called for a two percent target in a bid to drag Japan out of years of deflation.

He has criticised the central bank for not doing more to stoke Japan's economy and has advocated "unlimited" easing measures, drawing a mixed response from economists.

But the market has welcomed his rhetoric, sending the yen lower and boosting the Nikkei index in recent weeks.

The dollar was lower against most Asia-Pacific currencies, buying 1,075.15 South Korean won from 1,075.80 won on Friday, while falling to 30.61 Thai baht from 30.65 baht, to 9,650 Indonesian rupiah from 9,794 rupiah and to 55.11 Indian rupees from 55.18 rupees.

However, it rose to Sg$1.2214 from Sg$1.2206 and to 41.16 Philippine pesos from 41.12 pesos. The greenback remained unchanged at Tw$29.05.

The Australian dollar was at $1.0403 from $1.0452 while China's yuan bought 13.53 yen from 13.47.

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