By Hiroyuki Kachi
The dollar was higher against the yen in Asian trade Friday,
tracking overnight strength driven by the Federal Reserve's latest
signals on monetary tightening that again showed a stark contrast
with the Bank of Japan's policy stance.
As of 0550 GMT, the dollar was at Y119.25 from Y118.79 late
Thursday in New York.
The greenback was hovering around Y119 until lunchtime, as
investors avoided any major moves ahead of the outcome of BOJ
policy meeting.
As widely expected, however, the central bank decided to stand
pat on monetary policy, despite a rapid fall in global oil prices
that threatens its efforts to generate 2% inflation.
The BOJ's nine-member board voted 8-1 to leave unchanged its
annual asset purchase amount at Y80 trillion ($673 billion), as was
expected by many economists. The BOJ is buying assets from the
market to flood the banking sector and the economy with cash in the
hope it will end 15 years of deflation and produce stable 2%
inflation.
After the BOJ decision, the U.S. currency quickly gained
momentum to hit as high of Y119.37 in the early afternoon,
exaggerated by "relatively large flows amid extremely thin turnover
and strength in the stock market," said Yuzo Sakai, manager of FX
business promotion at Tokyo Forex & Ueda Harlow, adding that
the buying was not incentive-backed.
Investors are now awaiting BOJ Gov. Haruhiko Kuroda's news
conference scheduled at 0630 GMT to see if he makes any remarks on
Japan's slowing inflation amid tumbling oil prices.
"Investors remain cautious to push higher," especially after the
gyrations in the dollar-yen trading pair earlier this month, said
Marito Ueda, director of FX Prime byGMO.
The Fed on Thursday broached the prospect of "beginning to
normalize the stance of monetary policy."
"But investors are now a bit cautious," as the Fed stance is not
something considered as keeping interest rates going up fast, said
Mr. Ueda.
Still, the downside is well supported by buying from Japanese
importers for commercial trade settlements ahead of the year-end
book closing, said Mr. Ueda.
In other currency trading, the euro was at $1.2278 from $1.2285,
while the common currency was at Y146.45 from Y145.91.
The WSJ Dollar Index, a measure of the dollar against a basket
of major currencies, was up 0.04% at 82.43.
Interbank Foreign Exchange Rates At 00:50 EST / 0450 GMT
Latest Previous %Chg Daily Daily %Chg
2150 GMT High Low 12/31
Dollar Rates
USD/JPY Japan 119.24-25 118.83-84 +0.35 119.37 118.82 +13.24
EUR/USD Euro 1.2277-80 1.2285-88 -0.07 1.2293 1.2274 -10.64
GBP/USD U.K. 1.5653-58 1.5669-74 -0.10 1.5676 1.5652 -5.46
USD/CHF Switzerland 0.9810-14 0.9798-802 +0.12 0.9816 0.9793 +9.88
USD/CAD Canada 1.1577-82 1.1573-78 +0.03 1.1592 1.1575 +9.03
AUD/USD Australia 0.8177-81 0.8164-68 +0.16 0.8189 0.8156 -8.29
NZD/USD New Zealand 0.7791-97 0.7761-67 +0.39 0.7796 0.7758 -5.19
Euro Rate
EUR/JPY Japan 146.38-42 145.97-06 +0.28 146.51 145.95 +1.12
Source: ICAP PLC
Write to Hiroyuki Kachi at Hiroyuki.Kachi@wsj.com