Yen weaker in Asia

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IOL pic jan21 asian markets yen Associated Press File picture: Eugene Hoshiko

Tokyo - The yen weakened in Asia on Tuesday with a Bank of Japan (BoJ) two-day meeting in focus as investors wait to see if policymakers unveil fresh measures as part of its stimulus programme.

In Tokyo morning trade, the dollar rose to 104.58 yen, from 104.10 yen in London late Monday. US markets were closed on Monday for a public holiday.

The euro also firmed to 141.69 yen from 141.19 yen, while the single currency weakened to to $1.3548 from $1.3563 ahead of a German investor sentiment survey later in the day.

Investors are waiting to see if the BoJ adds to its vast asset-buying scheme launched in April and which is a cornerstone of Prime Minister Shinzo Abe's campaign to kickstart the world's third-largest economy.

However, most analysts expect the bank to hold steady on new measures until it can gauge the effect of an April sales tax rise.

The rate hike, seen as crucial to containing Japan's massive national debt, has stoked fears it could derail the country's recovery and lead to a further expansion of its monetary easing.

The meeting “is unlikely to result in any significant changes to the asset purchase programme”, Capital Economics said in a report.

“We continue to favour October for the timing of any announcement of additional easing (rather than April as many still expect). Instead, the main business next week will be to update economic forecasts and review progress on inflation.”

The BoJ has set a target of 2.0 percent inflation within two years as part of a bid to reverse years of falling prices, which have weighed on growth, but observers are increasingly sceptical about its ambitious timeline.

The central bank's meeting comes about a week before the US Federal Reserve holds its policy meeting, with investors expecting a further reduction in its own stimulus programme.

The Fed last month said it would trim its bond-buying scheme by $10 billion a month to $75 billion in January, citing a firming economy. - AFP

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