Tokyo - The yen strengthened in Asia on Monday as investors shuffled their positions after weaker-than-expected Japanese growth figures dented confidence in Prime Minister Shinzo Abe's policy blitz, dubbed Abenomics.
In midday Tokyo trade, the dollar slipped to 101.57 yen, from 101.81 yen in New York on Friday afternoon, with the yen winning support from expectations that the Bank of Japan (BoJ) would hold fire on new easing measures after a two-day policy meeting.
The euro was mixed at 139.39 yen and $1.3720 from 139.42 yen and $1.3715 in US trade, after data on Friday showed that a modest recovery in the eurozone economy remains on track.
In Japan, the economy logged its best performance in three years, expanding 1.6 percent, as Abe's growth blitz drove the expansion, but weak second-half data and an April sales tax rise dampened the outlook for strong growth this year.
The world's third-largest economy expanded just 0.3 percent between October and December, data showed on Monday.
Abe's growth policy has boosted Japanese stocks and driven down the yen's value, but investors were “discouraged by the recent drops in stock prices and today's weaker-than-expected GDP data”, said Shuichi Kanehira, head of spot forex trading at Mizuho Bank.
“Expectations for Abenomics and the Japanese economy has spawned buying of Japanese stocks and, partly for hedging purposes, yen selling. This coupled trading is being unwound for now. It's not positive yen buying,” he added.
Takako Masai, head of markets research at Shinsei Bank, told Dow Jones Newswires that “the longer-term trend of a weaker yen is still intact”.
There has been speculation that the BoJ will expand its easy-money policies later this year, but policymakers are widely expected to hold off fresh measures after the BoJ wraps up its meeting on Tuesday. Easing measures tend to weigh on a currency.
In the eurozone, the bloc's economy grew 0.3 percent in the fourth quarter of last year, at the top end of forecasts, after it nearly stalled in the third quarter when it expanded just 0.1 percent. But problems remain, notably near-record unemployment and deflation risks. - AFP