Yen on The Prowl; AP delayed

The yen rose from near its weakest level against the dollar since June 2010 after the Bank of Japan (8301) said it will conduct open-ended asset purchases from 2014, disappointing investors who expected bolder action now.

Japan’s currency advanced at least 0.2 percent against all of its 16 major counterparts after the BOJ said it will buy about 13 trillion yen ($146.6 billion) in assets per month from January 2014 and as it set a 2 percent inflation target. The euro rose for the first time in three days versus the dollar after German investor confidence in January increased to the highest in 2 1/2 years, adding to signs that Europe’s largest economy is gathering momentum.

“The timing is the factor that caused the market to be a little disturbed,” said Jeremy Stretch, head of foreign- exchange strategy at Canadian Imperial Bank of Commerce in London, referring to the decision to buy assets from next January. “We haven’t seen the big bazooka being taken out in terms of the weakening of the yen, which is implicit in getting anywhere near that inflation target.”

The yen gained 0.9 percent to 88.76 per dollar at 10:39 a.m. London time, after earlier depreciating as much as 0.6 percent. It reached 90.25 yesterday, the weakest since June 23, 2010. Japan’s currency gained 0.7 percent to 118.45 per euro. The 17-nation common currency rose 0.2 percent to $1.3345.

“In order to overcome deflation early and achieve sustainable economic growth with price stability, the Government and the Bank of Japan will strengthen their policy coordination,” the BOJ said in a statement today. The central bank said it will pursue monetary easing and aim to achieve the 2 percent inflation target at “the earliest possible time.”

Bloomberg

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