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Tokyo - The yen eased against its major counterparts in Asia on Monday, as a contraction in Japan's economy during the final quarter of 2015 sparked talk of another recession among analysts.
The world's number three economy shrank 0.4% in the October-December quarter - an annualised 1.4% - the Cabinet Office said early on Monday, dealing another blow to Prime Minister Shinzo Abe's faltering attempts to kick-start growth and ramp up inflation.
For the whole of last year growth was a measly 0.4%.
"Japanese policy makers need to go on an all-out war against the risk of a recession," Takuji Okubo, principal at Japan Macro Advisors, told Bloomberg TV.
The Bank of Japan "should keep on easing monetary policy," he added. "Prime Minister Shinzo Abe should definitely cancel the sales tax planned for next year.
"Policymakers need to show the market they are aware of the risks and they are doing everything they can to prevent a recession."
In Tokyo, the greenback rose to ¥113.97 from ¥113.25 on Friday in New York and ¥112.17 in Tokyo earlier in the day. The euro gained to ¥127.64 from ¥127.40 in US trade, while dropping to $1.1221 from $1.1250.
The weak growth figures will put a renewed spotlight on whether Abe will follow through with another sales tax hike next year, after a previous one in April of 2014 that was subsequently credited with throwing the economy into recession.
The rise is seen as key to containing a signalling national debt, but it could further dent spending and hurt the wider economy.
Solid US retail prices on Friday helped lift investor sentiment, although analysts warned against overt optimism.
"Better-than-expected US retail sales improved sentiment, but whether that continues will depend how markets react to Chinese trade data," Toshiya Yamauchi, a senior analyst at Ueda Harlow, wrote in a note to clients.
"If Chinese imports continue to shrink, market sentiment can easily go back to risk aversion."
China announced later on Monday that exports fell 6.6% year-on-year in January, while imports tumbled 14.4%.
In emerging market currencies, the oil-linked Malaysian ringgit rose 0.22% against the dollar as crude prices stayed above $29 a barrel. The Indonesian rupiah and Philippine peso also enjoyed gains against the US unit.
