Yen gains as some BoJ policymakers fret about QE costs
Credit: Reuters/Dado Ruvic/Files
A picture illustration of Euro banknotes taken in central Bosnian town of Zenica, April 25, 2014.
Further supporting the euro zone common currency, the head of the Bundesbank warned about the legal hurdles the European Central Bank would face if it went down the path of printing money to buy government bonds.
The remarks from Jens Weidmann raised questions over the ECB's ability to deliver after its president, Mario Draghi, threw the door open for further measures to bolster the euro zone.
All this saw the euro climb to as high as $1.2443 EUR= from a two-year trough around $1.2358 hit overnight. It rose to 147.385 yen EURJPY=R from 145.59, and was back within striking distance of a six-year peak of 149.12 set last week.
The dollar was down 0.3 percent at 117.915 yen after creeping up to 118.59 earlier in the session.
The Japanese currency has been under heavy pressure, hitting a seven-year low of 118.98 last week, since the Bank of Japan late last month surprised many by expanding its already-massive stimulus program.
But the speed of the yen's depreciation has prompted Japanese officials to voice concern. Japan's finance minister on Friday described the fall in the yen as 'too rapid', which caused it to bounce briefly.
On Tuesday, Bank of Japan Governor Haruhiko Kuroda said recent yen falls are positive for exporters, but hurt households as well as small firms and non-manufacturers through rises in import costs.
Also on Tuesday, minutes of the last BOJ meeting showed board members expressed concern that expanding the central bank's quantitative easing could increase the risk that it will be seen as financing the government deficit. Four of the BOJ's nine board members opposed the Oct. 31 decision to expand policy.
'There wasn't much from BOJ Governor Kuroda's speech that the forex market focused on, but the central bank minutes showed that there was some concern expressed about the weak yen and that seems to have taken dollar/yen off its stride,' said Shinichiro Kadota, chief Japan FX strategist at Barclays in Tokyo.
The Australian dollar relinquished almost all of its recent gains as relief over monetary easing in China gave way to worries about the underlying weakness in Asia's economic powerhouse, suggesting investors were still looking to sell the currency on any rally.
It slid to $0.8582 AUD=D4 from a high of 87 U.S. cents. The Aussie climbed as far as $0.8723 after a surprise interest rate cut on Friday by China, Australia's biggest export market.
(Editing by James Dalgleish and Richard Borsuk)
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